A New Credit and Loan Lending Strategy and Credit in Banking Systems: An Evolutionary Game Theory Approach

In this paper, authors offer one novel mathematical model of credit lending to customers based on evolutionary game theory, and the model presents an efficient and realistic approach. The purpose of the article is to examine the evolutionary game between banks and customers for granting facilities and credit. Authors assumed that customers are divided into two types. The first type of customers includes individuals or small and medium enterprises (SME), applying for microloans from the bank. The second type of customers includes corporate banking or large enterprises, applying for large loans from the bank. The relationship between the bank and the customers is a double-sided problem. Banks and customers may trust each other or want to behave opportunistically. The results show that the game has two equilibriums, and the optimal equilibrium, which is the best-case scenario, occurs when customers and bank players tending to keep “honest” and to “credit,” respectively. Authors used the evolutionary stable strategy to express the parameters that affect these interactions, and by adjusting some of these parameters, authors move the equilibrium towards the optimal solution of the game. Also, by adjusting these parameters, banks can gain more profitability.