A Game Theoretic Approach to Corporate Lending by the Banks in India

Chapter in the book "Economic Behavior, Game Theory, and Technology in Emerging Markets", Bryan Christiansen and Müslüm Basilgan (Eds.), Pennsylvania: IGI-Global (2013)

Posted: 29 Jun 2014

See all articles by Rituparna Das

Rituparna Das

Sharda School of Business Studies, Sharda University

Date Written: November 30, 2013

Abstract

A series of corporate loan defaults facing the Indian banks in the post-crisis period of 2008 led to the downgrading of India’s global credit rating in 2012. Against this backdrop, this chapter delivers an insight to the reader into the games that occur between lending banks and corporate borrowers in addition to the games between the banks themselves in lending competition. The chapter covers various strategies of actions in the structures of bilateral monopoly, duopoly, and oligopoly, the Nash equilibrium, prisoners’ dilemma, decision trees, and binomial analysis. In modeling the default probability, the profits of the lender and the borrower, a number of corollaries, one lemma, and one theorem are deduced in this chapter.

Keywords: bilateral monopoly, duopoly, oligopoly, Nash equilibrium, prisoners’ dilemma, decision tree, binomial tree, default probability

JEL Classification: C72

Suggested Citation

Das, Rituparna, A Game Theoretic Approach to Corporate Lending by the Banks in India (November 30, 2013). Chapter in the book "Economic Behavior, Game Theory, and Technology in Emerging Markets", Bryan Christiansen and Müslüm Basilgan (Eds.), Pennsylvania: IGI-Global (2013), Available at SSRN: https://ssrn.com/abstract=2460041

Rituparna Das (Contact Author)

Sharda School of Business Studies, Sharda University ( email )

KNOWLEDGE PARK III
GREATER NOIDA, UT
India

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