Progressive Current Accounts: Profit-Sharing Interest

Salvador Cruz Rambaud and María del Carmen Valls Martínez
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María del Carmen Valls Martínez: Departamento de Dirección y Gestión de Empresas, University of Almería, Spain

International Game Theory Review (IGTR), 2003, vol. 05, issue 02, 139-149

Abstract: Certain financial investments have different profitabilities according to the invested capital. In particular, there are some bank transactions, such as progressive current accounts, which discriminate nominal rates of interest, depending on the invested sums, that is, transactions whose underlying financial laws are not homogeneous of the first degree with respect to the amounts. More specifically, this discrimination occurs when assigning an equal rate to the capitalsCin the same interval]Ci,Ci+1]. This makes the financial law discontinuous with finite jumps, once the term has been fixed. Of course, it would be convenient, for a group of investors, to join their savings because greater rates of interest can be obtained. The question is how to distribute, in a rational way or with equity, among the individual agents, the interest obtained jointly. Our findings are based on a progressive sharing, using differential calculus.

Keywords: Financial law; progressive current account; profit-sharing; non-homogeneous; sub-additive (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2003
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DOI: 10.1142/S0219198903000945

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