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A Game-Theoretic Model for “Zero-Interest” Instalment Schemes

Mihir Dash () and T. Motukuri
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T. Motukuri: ICICI Bank, India

Journal of Applied Management and Investments, 2019, vol. 8, issue 1, 1-5

Abstract: The present study extends the previous analysis by proposing a game-theoretic model for the optimal choice of ‘zero-interest’ instalment scheme. The choice of scheme is analysed in two stages: the extent of down-payment the consumer is willing to pay, and the payment period that the financing institution is willing to offer. The study suggests that, by restructuring loan repayment terms, it may sometimes be possible to benefit both financial institutions and consumers. Further extension of the present study would be possible using multi-criteria decision methods, as individual consumers need to balance between decision criteria including the amount of down-payment that they have to immediately pay, the period over which they can spread the payments, and the overall net present value of the scheme in their choice of scheme.

Keywords: ‘zero-interest’ instalment scheme; game-theoretic model; multi-criteria decision methods (search for similar items in EconPapers)
JEL-codes: C70 G11 G21 (search for similar items in EconPapers)
Date: 2019
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