Consumer Lending in Banks: System Dynamics Modelling

Modern consumer lending, which is carried out by banks, financial companies, and, to a lesser extent, credit unions, is a complex system. This system includes many blocks that interact with each other and affect the result. As a result of their interaction in dynamics, the values of indicators of ef...

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Main Authors: Аndriy Kaminskyy, Oleksii Petrovskyi
Format: Article
Language:English
Published: National University of Kyiv-Mohyla Academy 2019-11-01
Series:Наукові записки НаУКМА: Економічні науки
Subjects:
Online Access:http://spne.ukma.edu.ua/article/view/185198/184786
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spelling doaj-5a7916dbd43f4fd69e7814b470be6cc52021-08-03T00:55:51ZengNational University of Kyiv-Mohyla AcademyНаукові записки НаУКМА: Економічні науки2519-47392519-47472019-11-0141485310.18523/2519-4739.20194.1.48-53Consumer Lending in Banks: System Dynamics ModellingАndriy Kaminskyy0Oleksii Petrovskyi1National University of Kyiv-Mohyla AcademyJSB “UKRGASBANK”Modern consumer lending, which is carried out by banks, financial companies, and, to a lesser extent, credit unions, is a complex system. This system includes many blocks that interact with each other and affect the result. As a result of their interaction in dynamics, the values of indicators of effectiveness are formed. The task that arises is to identify the mutual dependency of the constituent units and their influence on the result of consumer lending over time. The aim of the article is to model consumer lending processes using system dynamics methods. The model proposed in the paper by the system of dynamics makes it possible to display the behaviour of the consumer lending system over time. To display the logic of the system, we used the causal loop diagram tool. This made it possible to visualize the consumer credit system taking into account interconnections. The system is structured into blocks that characterise the main components of the functioning of the lending system. When building the model, four important units of the system were analyzed: technological rating, marketing funding, marketing strategy, and risk management. For this, a simulative analysis was applied. Based on this, it is shown that the marginal results are quite different. The ways are provided to optimize priority of expenses. The dependency of income management has a specific non-linear form. It is possible to find out the level of rigidity of risk management by using simulation analysis.http://spne.ukma.edu.ua/article/view/185198/184786system dynamic methodssimulation analysisconsumer lendingcredit grantingmarketingrisk managementeconomicsfinance
collection DOAJ
language English
format Article
sources DOAJ
author Аndriy Kaminskyy
Oleksii Petrovskyi
spellingShingle Аndriy Kaminskyy
Oleksii Petrovskyi
Consumer Lending in Banks: System Dynamics Modelling
Наукові записки НаУКМА: Економічні науки
system dynamic methods
simulation analysis
consumer lending
credit granting
marketing
risk management
economics
finance
author_facet Аndriy Kaminskyy
Oleksii Petrovskyi
author_sort Аndriy Kaminskyy
title Consumer Lending in Banks: System Dynamics Modelling
title_short Consumer Lending in Banks: System Dynamics Modelling
title_full Consumer Lending in Banks: System Dynamics Modelling
title_fullStr Consumer Lending in Banks: System Dynamics Modelling
title_full_unstemmed Consumer Lending in Banks: System Dynamics Modelling
title_sort consumer lending in banks: system dynamics modelling
publisher National University of Kyiv-Mohyla Academy
series Наукові записки НаУКМА: Економічні науки
issn 2519-4739
2519-4747
publishDate 2019-11-01
description Modern consumer lending, which is carried out by banks, financial companies, and, to a lesser extent, credit unions, is a complex system. This system includes many blocks that interact with each other and affect the result. As a result of their interaction in dynamics, the values of indicators of effectiveness are formed. The task that arises is to identify the mutual dependency of the constituent units and their influence on the result of consumer lending over time. The aim of the article is to model consumer lending processes using system dynamics methods. The model proposed in the paper by the system of dynamics makes it possible to display the behaviour of the consumer lending system over time. To display the logic of the system, we used the causal loop diagram tool. This made it possible to visualize the consumer credit system taking into account interconnections. The system is structured into blocks that characterise the main components of the functioning of the lending system. When building the model, four important units of the system were analyzed: technological rating, marketing funding, marketing strategy, and risk management. For this, a simulative analysis was applied. Based on this, it is shown that the marginal results are quite different. The ways are provided to optimize priority of expenses. The dependency of income management has a specific non-linear form. It is possible to find out the level of rigidity of risk management by using simulation analysis.
topic system dynamic methods
simulation analysis
consumer lending
credit granting
marketing
risk management
economics
finance
url http://spne.ukma.edu.ua/article/view/185198/184786
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