What is it about?
This article describes an equilibrium model of the interest rate that banks charge each other for loans, given the aggregated loan requirements and the aggregated loanable funds of the banking system.
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Why is it important?
An equilibrium model supplies the reference point for deciding whether an item is overpriced or underpriced, and therefore whether the price is more or likely to fall or to rise. Such a model is especially useful in a game, because the data required of the model is readily available. In a game where participants manage banks that deal with retail customer managed by other participants, the model automates the flow of funds among banks.
Read the Original
This page is a summary of: Interbank Interest-Rate Model for the Banking Business of a Multi-Industry Game, Simulation & Gaming, August 2019, SAGE Publications, DOI: 10.1177/1046878119858376.
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