International Journal of Financial Technology Perspective

International Journal of Financial Technology Perspective

A Game Theoretical Analysis of Financial Crisis

Authors
Fraydoon Rahnamay Roodposhtil 1
Mostafa Goudarzi 2
1 Department of Business Administration, Islamic Azad University Central Tehran Branch, Tehran. Iran.
2 Department of Business Administration. Islamic Azad University Central Tehran Branch, Tehran. Iran.
Abstract
This paper proposes a game-theoretical framework to clarify some element causes of financial crisis and explain some actions which central banks and governments have applied them to restrain the crisis. This paper first explains causes of crisis in framework a game between banks and people who get mortgage from them. The game theoretical analyze explains why people relinquish their house and don't repay their loan and also explain why the banks confiscate the house as soon as the lender don't repay one installment. Next game has been discussed between two countries to explain why governments prefer to guarantee the deposits. Furthermore, we have analyzed injecting liquidity into the market in two ways to explain why some countries pump liquidity into the market and some Other doesn't do it and also in where two states have been resulted as equilibrium, we have calculated probability of each state using mixed strategies framework.
Finally, we have provided a comprehensive discussion to analyze all examined events and that how these events prompt involved government to restrain the crisis and also that how they retrain the crisis.
Keywords
financial Crisis
game theory
Nash equilibrium
payoff
mixed Strategy
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International Journal of Financial Technology Perspective
Volume 2, Issue 4
Spring 2025
Pages 45-52