Investigating the risk-taking behavior of the banking industry in the form of the general equilibrium model of overlapping generations (OLG)

In this paper, using a general equilibrium model of overlapping generations, the impact of different financing plans of the banking industry on their risk-taking motivation is investigated. In the non-competitive banking industry, financing is done by imposing taxes on the older generation or the bankchr('39')s internal resources (bank shares). As an effective policy, this action optimizes social risk-taking. But fiscal commitment policies that tax the younger generation always increase the risk. The model predicts that in safe investments due to the existence of depositors with a uniform degree of risk, the optimal path of deposits, bank profits, expected consumption and bank value over time has an upward trend, on the other hand in investment High-risk products are the only optimal path to expected stable consumption. Also in the competitive banking industry, the optimal path of profit and consumption is expected to fluctuate in high-risk investments, but in safe investments, the optimal path of these variables has been smooth after an upward trend.