Equilibrium Analysis and Policy Design of Bank Interest Rates in Iran: A Game Theory Approach

Articles in Press

Document Type : Research Paper

Authors

1 Financial and Banking Department, Faculty of Management and Accounting , Allameh Tabatabi University, Tehran

2 Financial and Banking Department, Faculty of Management and Accounting, Allameh Tabatabi University, Tehran, Iran

3 Accounting Department, Faculty of Economic and Social Since , Alzahra University, Tehran, Iran

10.22103/jdc.2024.23629.1477

Abstract

This study employs game theory to analyze the strategic interactions among stakeholders within the Iranian banking system and the impact of interest rate policies. This analysis helps identify equilibrium points and design effective and fair policies. By leveraging game theory and graph modeling, the interactions among various actors in the Iranian banking system are meticulously analyzed, and their mutual impacts on interest rate policies are illustrated. The findings emphasize the importance of understanding these mutual interactions among stakeholders.In this analysis, the Central Bank of Iran aims to reduce inflation and strengthen the economy by increasing interest rates. This approach, guided by the government and market oversight, seeks economic equilibrium. Banks adjust interest rates to balance their profitability with economic stimulation, while investors and borrowers aim to preserve and increase their assets in unstable conditions.The research identifies the equilibrium states of interest rate actors and examines their evolutionary paths from the current state to the equilibrium state. Additionally, it investigates the equilibrium movements between actors and the impact of forming coalitions among them on interest rate equilibrium and the stability of these coalitions.This study examines the current and future states of stakeholders in interest rate policy and demonstrates that achieving an optimal and desirable state, aligned with the long-term goals of society, requires adjusting stakeholders' preferences and the active intervention of policymakers.

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Journal of Development and Capital

Articles in Press, Accepted Manuscript
Available Online from 03 December 2024

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History

  • Receive Date: 14 June 2024
  • Revise Date: 04 November 2024
  • Accept Date: 03 December 2024

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