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Bifurcations and complex dynamics in a banking duopoly model with macroprudential policy

Author

Listed:
  • Ansori, Moch. Fandi
  • Brianzoni, Serena
  • Campisi, Giovanni

Abstract

We consider a banking duopoly model with a macroprudential policy in Indonesia called loan-to-deposit ratio-based reserve requirement (LDR-RR). The objective of the policy is to control the banking loans growth using a LDR-based penalty scheme that requires banks to save more money in the central bank to maintain their liquidity ratio. Following recent studies on banking models, we analyze a piecewise discrete-time model with two banks. We assume that the dynamics of the deposits follows the discrete logistic growth. Moreover, our model has two borders, hence we examine the resulting border-collision bifurcations. From the local stability analysis we find that, according to the parameter values, only the border-collision bifurcation or the flip bifurcation occurs. Finally, we perform several numerical simulations to confirm the stability analysis’ results. Our discrete dynamical system offers various possibilities of development for future research perspectives.

Suggested Citation

  • Ansori, Moch. Fandi & Brianzoni, Serena & Campisi, Giovanni, 2024. "Bifurcations and complex dynamics in a banking duopoly model with macroprudential policy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 641(C).
    • Handle: RePEc:eee:phsmap:v:641:y:2024:i:c:s0378437124002395
    DOI: 10.1016/j.physa.2024.129730
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