Valuation of deposit insurance Black–Scholes model using Banach contraction principle
Deposit insurance is a mechanism by which financial institutions are stabilized. The danger of a bank’s inability to meet its consumer commitments due to its suspended license is insured through deposit insurance practices. A flat-rate insurance scheme would contribute to moral hazard and a financia...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2023-12-01
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| Series: | Partial Differential Equations in Applied Mathematics |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2666818123000840 |
| _version_ | 1797390322095882240 |
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| author | Sunday O. Edeki Sunday E. Fadugba Chaudry Masood Khalique |
| author_facet | Sunday O. Edeki Sunday E. Fadugba Chaudry Masood Khalique |
| author_sort | Sunday O. Edeki |
| collection | DOAJ |
| description | Deposit insurance is a mechanism by which financial institutions are stabilized. The danger of a bank’s inability to meet its consumer commitments due to its suspended license is insured through deposit insurance practices. A flat-rate insurance scheme would contribute to moral hazard and a financial panic when banks indulge in dangerous practices. Hence, a reliable model with an explicit solution is required. This paper considers a risk rate model for deposit insurance engendered by the classical Black Scholes Option Pricing Model. The solutions are obtained via the application of Banach Contraction Mapping or Method. The procedures involved are straightforward, easy, and flexible, even without giving up accuracy. The desired explicit solutions are obtained with less computational time. |
| first_indexed | 2024-03-08T23:10:02Z |
| format | Article |
| id | doaj.art-022fdd3b2d78467fbcbc881a1d272b04 |
| institution | Directory Open Access Journal |
| issn | 2666-8181 |
| language | English |
| last_indexed | 2024-03-08T23:10:02Z |
| publishDate | 2023-12-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Partial Differential Equations in Applied Mathematics |
| spelling | doaj.art-022fdd3b2d78467fbcbc881a1d272b042023-12-15T07:26:49ZengElsevierPartial Differential Equations in Applied Mathematics2666-81812023-12-018100571Valuation of deposit insurance Black–Scholes model using Banach contraction principleSunday O. Edeki0Sunday E. Fadugba1Chaudry Masood Khalique2Department of Mathematics, Dennis Osadebay University, Asaba, Nigeria; Covenant Applied Informatics and Communications-African Centre of Excellence, Covenant University, Ota, NigeriaDepartment of Mathematics, Ekiti State University, Ado Ekiti, NigeriaMaterial Science, Innovation and Modelling Research Focus Area, Department of Mathematical Sciences, North-West University, Mafikeng Campus, Private Bag X2046, Mmabatho 2735, Republic of South Africa; Corresponding author.Deposit insurance is a mechanism by which financial institutions are stabilized. The danger of a bank’s inability to meet its consumer commitments due to its suspended license is insured through deposit insurance practices. A flat-rate insurance scheme would contribute to moral hazard and a financial panic when banks indulge in dangerous practices. Hence, a reliable model with an explicit solution is required. This paper considers a risk rate model for deposit insurance engendered by the classical Black Scholes Option Pricing Model. The solutions are obtained via the application of Banach Contraction Mapping or Method. The procedures involved are straightforward, easy, and flexible, even without giving up accuracy. The desired explicit solutions are obtained with less computational time.http://www.sciencedirect.com/science/article/pii/S2666818123000840Partial differential equationsBlack–Scholes modelOption pricingDeposit insuranceAnalytical solutions |
| spellingShingle | Sunday O. Edeki Sunday E. Fadugba Chaudry Masood Khalique Valuation of deposit insurance Black–Scholes model using Banach contraction principle Partial Differential Equations in Applied Mathematics Partial differential equations Black–Scholes model Option pricing Deposit insurance Analytical solutions |
| title | Valuation of deposit insurance Black–Scholes model using Banach contraction principle |
| title_full | Valuation of deposit insurance Black–Scholes model using Banach contraction principle |
| title_fullStr | Valuation of deposit insurance Black–Scholes model using Banach contraction principle |
| title_full_unstemmed | Valuation of deposit insurance Black–Scholes model using Banach contraction principle |
| title_short | Valuation of deposit insurance Black–Scholes model using Banach contraction principle |
| title_sort | valuation of deposit insurance black scholes model using banach contraction principle |
| topic | Partial differential equations Black–Scholes model Option pricing Deposit insurance Analytical solutions |
| url | http://www.sciencedirect.com/science/article/pii/S2666818123000840 |
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