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

Document Type : Research Paper

Authors

1 Department of Financial and Banking, Faculty of Management and Accounting, Allameh Tabataba’i University, Tehran, Iran.

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

10.22103/jdc.2024.23629.1477

Abstract

Objective: This study aims to identify strategic equilibrium points and propose optimal and equitable policy measures to support the realization of overarching macroeconomic objectives.
 
Method: The research employs a mixed-method approach, combining semi-structured interviews with financial experts and graph-based modeling grounded in game theory. The data collected were analyzed using the GMCR+ (Graph Model for Conflict Resolution) software, through which strategic equilibrium states among key actors were identified and assessed.
 
Results: The results indicate that central bank interest rate policies—such as rate hikes intended to control inflation and stimulate economic growth—interact dynamically with the decisions of other major actors, including banks, investors, and the government. These interactions produce reciprocal effects on core macroeconomic variables. Additionally, decisions made by the parliament and the executive branch can trigger chain reactions among stakeholders, thereby reshaping economic equilibriums. The study further demonstrates that purposeful coalitions among actors significantly contribute to the resilience of interest rate policies and enhance the stability and desirability of equilibrium outcomes.
 
Conclusion: The findings underscore the importance of aligning stakeholder preferences and ensuring active intervention by policymakers to achieve long-term economic goals. Effective management of interest rate policies emerges as a key mechanism for fostering informed decision-making and promoting sustainable economic growth.

Keywords

Main Subjects

References

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

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