Naslov
Simulation model of a fractional-reserve banking system: System dynamics approach

Autori
Mandić, Leo ; Tustanovski, Emil ; Pejić Bach, Mirjana ; Ivanov, Marijana ; Zoroja, Jovana

Vrsta, podvrsta i kategorija rada
Sažeci sa skupova, sažetak, znanstveni

Izvornik
Book of Abstracts, 16th International Conference on Operational Research, KOI 2016 / Scitovski, Rudolf ; Zekić-Sušac, Marijana - Osijek : Hrvatsko društvo za operacijska istraživanja (CRORS), 2016, 62-63

Skup
16th International Conference on Operational Research

Mjesto i datum
Osijek, Hrvatska, 27.09.2016. - 29.09.2016

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
System dynamics ; Fractional-reserve banking ; Monetary policy ; Textbook models ; Monetary policy simulations ; Monetary systems

Sažetak
Monetary policy has often been a topic of heated political discussions in Croatia, especially during the recession years. Each side has displayed various degrees of knowledge of the topics at hand, but the vast difference in opinions indicated a lack of consensus on the question of effectiveness of the mechanisms of monetary policy, as well as its impact. This was taken as an indicator of the need for a better understanding of the complex relationships within a monetary system, especially of the fractional-reserve banking system. The purpose of this paper is to determine the suitability of system dynamics for simulating the behavior of a monetary system, with the two goals: (i) to develop a money supply management simulation model of a fractional-reserve banking system, (ii) to compare the simulation results with the predictions of the theoretical model. The behavior of the model is tested using two scenarios: (i) expansionary monetary policy and (ii) contractionary monetary policy. This paper is limited by the fact that is uses a theoretical fractional-reserve banking model as the basis for the model development, which omits some key aspects of real-world monetary systems, such as loan defaults, variable interest rates, and investment alternatives to deposit accounts. Although this makes the model unsuitable for making real-world predictions, the system dynamics approach adds to its value as by highlighting the interactions of various elements within the model and by enabling the comparison of the behavior of real-world fractional-reserve banking systems and of the simplified models across prolonged periods of time. Further research should focus on examining the effects of including some of the omitted elements on the behavior of the entire system, and on improving its predictive capabilities. This should not only increase its experimental value, but also help create a more useful model by shedding additional light on the interactions between the elements of the Croatian monetary system, and the mechanisms through which it influences the Croatian economy.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija, Informacijske i komunikacijske znanosti

POVEZANOST RADA