If a bank is created and you deposit $1, the bank has $1.
They can lend only $0.9 because they need to keep $0.1 as reserve (for example).
From there different things could happen:
a) if the borrower takes the $0.9 and takes it elsewhere the bank cannot lend a single additional cent until they get more deposits.
The fractional reserve means they could only lend a fraction of the dollar.
Maybe the money will be deposited in another bank who will then lend to someone else, but for the original bank who got $1 it stops there.
b) if that money remains in the bank as a new deposit, they have now $1.9 in deposits.
They can lend a fraction of the additional $0.90, and make an additional loan of $0.81 (keeping $0.19 in reserves in total).
If the second loan also ends in the bank as a deposit they will have $2.71 in deposits, they can make a new loan etc. but the multiplier is limited.
For shares there is no limit at all.
If Alice has a share she can lend it to Bob who sells it to Carol. Carol can lend it to Daniel who sells it to Elaine. Elaine can lend it to Felix who sells it to Gloria. Gloria can lend it to Hector who sells it to Ingrid. They can go on for as long as they want and all the ladies will be long one share.
Not really. You. nor the bank, can't lend more money that you have, but you can promise more than you have.
That automatically implies something more complicated than lending. At the very least, money was borrowed (on a promise) from a third party in order to provide the money they loaned.
You and I can do the same, I can promise you whatever I like. And if I manage to convince you, or a third party, that my promise is good, I can even borrow money from them. And loan out that money, despite not owing it; Unless there is something fraudulent in doing that wrt my agreements with the borrower - but the bank has the same, nationally regulated, restrictions too.
