Bifurcations and complex dynamics in a banking duopoly model with macroprudential policy

Moch. Fandi Ansori, Serena Brianzoni and Giovanni Campisi

Physica A: Statistical Mechanics and its Applications, 2024, vol. 641, issue C

Abstract: We consider a banking duopoly model with a macroprudential policy in Indonesia called loan-to-deposit ratio-based reserve requirement (LDR-RR). The objective of the policy is to control the banking loans growth using a LDR-based penalty scheme that requires banks to save more money in the central bank to maintain their liquidity ratio. Following recent studies on banking models, we analyze a piecewise discrete-time model with two banks. We assume that the dynamics of the deposits follows the discrete logistic growth. Moreover, our model has two borders, hence we examine the resulting border-collision bifurcations. From the local stability analysis we find that, according to the parameter values, only the border-collision bifurcation or the flip bifurcation occurs. Finally, we perform several numerical simulations to confirm the stability analysis’ results. Our discrete dynamical system offers various possibilities of development for future research perspectives.

Keywords: Banking duopoly; Border-collision bifurcation; Stability; Complex dynamics; Loan-to-deposit ratio; Reserve requirement (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:641:y:2024:i:c:s0378437124002395

DOI: 10.1016/j.physa.2024.129730

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