A New Credit and Loan Lending Strategy in Banking Systems; an Evolutionary Game Theory Approach

In this paper we offer one novel mathematical model of credit lending to customers based on evolutionary game theory‎. ‎This model presents an efficient and realistic approach‎. ‎The target of our paper is to explore the evolutionary game between banks and customers to grant facilities and credit‎.  ‎We assume that customers are divided into two types‎. ‎The first type of customers include individual or small and medium enterprises (SME)‎, ‎apply for micro loans from the bank‎. ‎The second type of customers include corporate banking or large enterprises‎, ‎apply 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. ‎This model helps the bank to be able to purposefully decide on the allocation of facilities to customers and find the optimal strategy. This article examines the parameters influencing these strategic decisions.The results show that by increasing or decreasing some of the parameters in the model, banks can be more successful in granting facilities to customers and ultimately increase their profitability.