An Agent Based Modeling Approach to the Check Payments Among SMEs in Turkey

İlker Arslan and Alper Duman
Additional contact information
İlker Arslan: İzmir Ekonomi Üniversitesi

Iktisat Isletme ve Finans, 2013, vol. 28, issue 332, 67-86

Abstract: Systemic risk and fragility became more important especially after the crisis of 2008. However, the burgeoning literature especially focuses on interbank and bank-firm credit networks. On the other hand, in developing countries, deferred check payments also compose another kind of credit networks and complement for the bank-firm credit lines. Check payments among SMEs even substitute for bank credits. Recent developments in Turkey offer an interesting setting in which we examine the fragility of check payment system. In this paper, we investigate whether the dramatic increase in nonpayments of checks have been due to the decline in growth or loosening of the legal sanctions. We analyze check payments using an agent based model. We can view check payments as a network structure where firms are nodes and check obligations are directed links. Firms’ decision on whether paying their checks or not, depend on behavior of their neighbors and probable payoffs to their decisions. Our main finding is that lack of strict punishment can cause default cascades in check payment systems.

Keywords: Business Fluctuations; Financial Stability; Bankruptcy Chains; Agent Based Modeling (search for similar items in EconPapers)
JEL-codes: C63 D85 E32 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:iif:iifjrn:v:28:y:2013:i:332:p:67-86

Ordering information: This journal article can be ordered from
http://www.iif.com.t ... ew/iif.2013.332.3851

Access Statistics for this article

Iktisat Isletme ve Finans is currently edited by Ali Bilge

More articles in Iktisat Isletme ve Finans from Bilgesel Yayincilik
Bibliographic data for series maintained by Ali Bilge ().