A GAME THEORETICAL APPROACH TO INVESTIGATE DIFFERENT TYPE OF BANK CREDITS

By the help of the concept of asymmetric information, this study examines the direction in which the use of credits with the customers who has different types of risk status of the banking sector in Turkey has been analyzed by game theoretical approach. In this study also, a hypothetical game is constructed for different types of loans (vehicle, housing and consumer loans) and Nash equilibrium strategies were examined. The hypothetical game has two players; borrower and bank. Both players have contradictory purposes and applications. Bank has four and customer has two different strategies. The strategies of bank player were determined by considering the existence of different credit status of the customers. When the outputs of the hypothetical game are analyzed, it is seen that there are two Nash equilibrium pairs between banks and customers and these equilibrium pairs does not change when the game is examined separately in vehicle, housing and consumer loans. The Nash equilibrium was found to give credit to both risky and risk-free customer groups or not to give credit to either group.

Keywords

Asymmetric Information, Adverse Selection, Moral Hazard, Nash Equilibrium, Banking Sector.