Non-performing loans, expectations and banking stability: A dynamic model

Andrea Bacchiocchi, Gian Italo Bischi and Germana Giombini

Chaos, Solitons & Fractals, 2022, vol. 157, issue C

Abstract: This paper proposes dynamic oligopolistic models to describe heterogenous banks that compete in the loan market. Two boundedly rational banks adopt an adaptive behavior to increase their profits under different assumptions of limited information and bounded computational ability, in the presence of a share of credits that might not be reimbursed (i.e. non-performing loans). Each Nash equilibrium is an equilibrium point of the dynamic adjustments as well. Thus, the repeated strategic interactions between banks may converge to a rational equilibrium according to the parameters’ values and the initial conditions.

Keywords: Oligopolistic banking model; Non-performing loans; Discrete dynamical system; Bounded rationality; Non-linearity (search for similar items in EconPapers)
JEL-codes: C61 C62 D43 E51 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0960077922001163
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:chsofr:v:157:y:2022:i:c:s0960077922001163

DOI: 10.1016/j.chaos.2022.111906

Access Statistics for this article

Chaos, Solitons & Fractals is currently edited by Stefano Boccaletti and Stelios Bekiros

More articles in Chaos, Solitons & Fractals from Elsevier
Bibliographic data for series maintained by Thayer, Thomas R. ().