scholarly journals Mathematical model in the banking on the ex ample of simple percentage

VUZF Review ◽  
2021 ◽  
Vol 6 (4) ◽  
pp. 187-194
Author(s):  
Anna Małgorzata Jatczak
Keyword(s):  
Mathematical Modeling ◽  
Interest Rate ◽  
Modern World ◽  
Initial Value ◽  
Initial Capital ◽  
Financial Activity ◽  
Mathematical Relation ◽  
The Interest Rate ◽  
One Year ◽  
Capital Value

Mathematical modeling is the description of the reality in the language of the mathematics and formal logic which creates symbols, mathematical relation and also strictly determined rules of employing them (Jaworski, Micał 2005). This article is devoted to the structure of the model describing the process of increasing the capital value within the time which basis constitutes the calculations based on the rule of simple percentage. In its content are determined the chosen, basic terms associated with the financial activity of the bank (including interest rate, interest, discount). Mathematical models are also discussed enabling to count: the final capital for the initial capital with the fixed annual interest rate for the set time, the initial capital which generated the determined final capital with the fixed annual interest rate for the set time, the interest rate on the basis of the initial and final capital after certain time, the initial value of the loan for the amount of the payoff within the fixed discount rate within the certain time, the value of the commercial discount for one year on the basis of the initial value of the loan and the amount of its payoff. The presented content will supply the reader with the knowledge in calculations applied in the banks associated with the simple percentage. The article constitutes the example of combination of the theoretical knowledge with the practice and it also shows how important mathematical modeling is in the modern world.

scholarly journals Retrospectives: From Usury To Interest

2007 ◽  
Vol 21 (1) ◽  
pp. 227-236 ◽  
Author(s):  
Joseph Persky
Keyword(s):  
Political Economy ◽  
Interest Rate ◽  
Middle Ages ◽  
Industrial Revolution ◽  
Adam Smith ◽  
Modern World ◽  
Jeremy Bentham ◽  
The Interest Rate ◽  
Definition Of ◽  
Total Welfare

Since the Middle Ages, each epoch has participated in the debate over the conditions in which lending should be prohibited as usury. While disagreements over the definition of usury remain, the debate came to its modern climax on the eve of the industrial revolution, in a well-known interchange between Jeremy Bentham and Adam Smith in the late 1780s. Smith, for all his faith in a system of natural liberty, proved unwilling to let the interest rate float. Bentham argued anything else must reduce total welfare. From a superficial perspective, the entire affair amounts to nothing more than a modest dispute between a failing master (Smith died in 1790) and an over-eager disciple. (Bentham acknowledged in the Defence that all he knew of political economy originated in Smith's works.) Yet the argument struck a fundamental chord. Gilbert K. Chesterton identified Bentham's essay on usury as the very beginning of the “modern world.” I tend to agree.

scholarly journals The Effect of Monetary Policy on Interest Rates in Turkey: A Microstructural Analysis

2017 ◽  
Vol 7 (2) ◽  
pp. 299
Author(s):  
Muharrem Afsar ◽  
Aslı Afsar ◽  
Emrah Dogan
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Microstructural Analysis ◽  
Turkish Republic ◽  
Interest Rate Volatility ◽  
The Interest Rate ◽  
One Year ◽  
Effect Of Monetary Policy ◽  
The Impact

The purpose of this study it to investigate the impact of monetary policy announcements by Central Bank of the Turkish Republic (CBRT) on market interest rates via micro variables on interest rates. In this context, this study investigated the relationship between monetary policy announcements and market interest rates for 2011:01-2015:10 term using GARCH model. The estimates have indicated that monetary policy announcements have different impacts on interest rate volatilities when distinguished as decisions on increasing, decreasing or fixing interest rates. It was found that contractionary monetary policy announcements have different impacts on market interest rates volatilities analyzed in the present study, while expansionary monetary policy announcements decrease the volatility on market interest rates. On the other hand, the announcements towards fixing the monetary policy increases the interest rate volatility of market interest rates. The results of the analysis also indicated that deposit interest rate weighted up to one year are affected the least by the monetary policy changes.

Advertising and Pricing Policies in a Two-Echelon Supply Chain with a Capital-Constrained Retailer

2019 ◽  
Vol 53 (4) ◽  
pp. 1331-1342
Author(s):  
Honglin Yang ◽  
Lingling Chu ◽  
Hong Wan
Keyword(s):  
Supply Chain ◽  
Interest Rate ◽  
Trade Credit ◽  
Wholesale Price ◽  
Retail Price ◽  
Stackelberg Equilibrium ◽  
Initial Capital ◽  
Pricing Policies ◽  
The Interest Rate ◽  
Theoretical Results

We consider a two-echelon supply chain consisting of one supplier and one capital-constrained retailer. The supplier can offer the retailer trade credit to fund his orders. To boost sales, the retailer invests part or all of initial capital exclusively in advertising at the beginning of the sales season. Demand is sensitive to both retail price and advertising expenses of the retailer. With a wholesale price contract, we analytically derive the Stackelberg equilibrium with respect to pricing by both parties and advertising by the retailer. Our results show that the retailer with less initial capital prefers to invest full initial capital in advertising irrespective of the advertising elasticity or the interest rate charged by the supplier. The retailer with more initial capital only invests part of initial capital in advertising. The retailer’s advertising policy under different initial capital levels always benefits the supply chain and the supplier. We further identify the effects of the advertising elasticity and the interest rate on the pricing policies. Numerical simulations and sensitivity analysis are given to elaborate our theoretical results.

The Role of Different Channels in Transmitting Monetary Policy into Output and Price in Vietnam

2015 ◽  
pp. 20-40
Author(s):  
Vinh Nguyen Thi Thuy
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Money Supply ◽  
Monetary Transmission ◽  
Impulse Response Functions ◽  
Short Run ◽  
The Exchange Rate ◽  
The Interest Rate ◽  
Interest Rate Channel

The paper investigates the mechanism of monetary transmission in Vietnam through different channels - namely the interest rate channel, the exchange rate channel, the asset channel and the credit channel for the period January 1995 - October 2009. This study applies VAR analysis to evaluate the monetary transmission mechanisms to output and price level. To compare the relative importance of different channels for transmitting monetary policy, the paper estimates the impulse response functions and variance decompositions of variables. The empirical results show that the changes in money supply have a significant impact on output rather than price in the short run. The impacts of money supply on price and output are stronger through the exchange rate and credit channels, but however, are weaker through the interest rate channel. The impacts of monetary policy on output and inflation may be erroneous through the equity price channel because of the lack of an established and well-functioning stock market.

DETERMINAN INFLASI DI INDONESIA PERIODE 1980-2015

2016 ◽  
Vol 21 (1) ◽  
pp. 1-7
Author(s):  
Risna Risna
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Money Supply ◽  
Government Spending ◽  
Positive Impact ◽  
Secondary Data ◽  
Quantitative Approach ◽  
State Spending ◽  
Factors Affecting ◽  
The Interest Rate

This study aims to determine the effect of government spending, the money supply, the interest rate of Bank Indonesia against inflation.This study uses secondary data. Secondary data were obtained directly from the Central Bureau of Statistics and Bank Indonesia. It can be said that there are factors affecting inflationas government spending, money supply, and interest rates BI. The reseach uses a quantitative approach to methods of e-views in the data. The results of analysis of three variables show that state spending significantand positive impact on inflationin Indonesia, the money supply significantand negative to inflationin Indonesia, BI rate a significantand positive impact on inflation in Indonesia

Insurance Companies and the Interest Rate

1953 ◽  
Vol 9 (4) ◽  
pp. 15-17
Author(s):  
Shelby Cullom Davis
Keyword(s):  
Interest Rate ◽  
Insurance Companies ◽  
The Interest Rate

Analyzing the financial and economic momentum as a result of changes in the interest rate

2020 ◽  
Vol 16 (9) ◽  
pp. 1656-1673
Author(s):  
V.V. Smirnov
Keyword(s):  
Interest Rate ◽  
Natural Gas ◽  
Central Bank ◽  
Crude Oil ◽  
Oil Prices ◽  
Global Capitalism ◽  
Positive Effects ◽  
Russian Economy ◽  
Oil And Natural Gas ◽  
The Interest Rate

Subject. The article discusses financial and economic momenta. Objectives. I determine financial and economic momenta as the interest rate changes in Russia. Methods. The study is based on a systems approach and the method of statistical analysis. Results. The Russian economy was found to strongly depend on prices for crude oil and natural gas, thus throwing Russia to the outskirts of the global capitalism, though keeping the status of an energy superpower, which ensures a sustainable growth in the global economy by increasing the external consumption and decreasing the domestic one. The devaluation of the national currency, a drop in tax revenue, etc. result from the decreased interest rate. They all require to increase M2 and the devalued retail loan in RUB, thus rising the GDP deflator. As for positive effects, the Central Bank operates sustainably, replenishes gold reserves and keeps the trade balance (positive balance), thus strengthening its resilience during a global drop in crude oil prices and the COVID-19 pandemic. The positive effects were discovered to result from a decreased in the interest rate, rather than keeping it low all the time. Conclusions and Relevance. As the interest rate may be, the financial and economic momentum in Russia depends on the volatility of the price for crude oil and natural gas. Lowering the interest rate and devaluing the national currency, the Central Bank preserves the resource structure of the Russian economy, strengthens its positions within the global capitalism and keeps its status of an energy superpower, thus reinforcing its resilience against a global drop in oil prices.

scholarly journals Risk Management for Bonds with Embedded Options

Mathematics ◽  
2020 ◽  
Vol 8 (5) ◽  
pp. 790
Author(s):  
Antonio Díaz ◽  
Marta Tolentino
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Interest Rates ◽  
Interest Rate Risk ◽  
Interest Rate Models ◽  
Management Measures ◽  
Interest Rate Risk Management ◽  
Embedded Options ◽  
The Interest Rate ◽  
Interest Rate Change

This paper examines the behavior of the interest rate risk management measures for bonds with embedded options and studies factors it depends on. The contingent option exercise implies that both the pricing and the risk management of bonds requires modelling future interest rates. We use the Ho and Lee (HL) and Black, Derman, and Toy (BDT) consistent interest rate models. In addition, specific interest rate measures that consider the contingent cash-flow structure of these coupon-bearing bonds must be computed. In our empirical analysis, we obtained evidence that effective duration and effective convexity depend primarily on the level of the forward interest rate and volatility. In addition, the higher the interest rate change and the lower the volatility, the greater the differences in pricing of these bonds when using the HL or BDT models.

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