A Dynamic Model of Functioning of a Bank

TL;DR

This paper introduces a dynamic programming approach to optimize bank profit maximization, providing a mathematical model and demonstrating its effectiveness for globally optimal solutions in banking operations.

Contribution

It presents a novel application of dynamic programming to model and solve the profit maximization problem in banking, ensuring globally optimal and stable solutions.

Findings

Dynamic programming yields globally optimal solutions for bank profit maximization.

The model ensures numerical stability in the optimization process.

A discrete multi-stage decision process effectively captures bank operations.

Abstract

In this paper, we analyze dynamic programming as a novel approach to solve the problem of maximizing the profits of a bank. The mathematical model of the problem and the description of a bank's work is described in this paper. The problem is then approached using the method of dynamic programming. Dynamic programming makes sure that the solutions obtained are globally optimal and numerically stable. The optimization process is set up as a discrete multi-stage decision process and solved with the help of dynamic programming.