Quantum credit loans

TL;DR

This paper introduces a quantum-inspired mathematical framework for credit loans, allowing flexible payment scheduling through basis rotations in a vector space formalism, enhancing borrower benefits without affecting lender earnings.

Contribution

It generalizes credit loan models using quantum mechanics formalism, introducing basis rotations to optimize payment schedules while preserving total debt and amortization.

Findings

Basis rotations improve payment schedules for borrowers.

The formalism allows tuning of periodic installments without affecting lender earnings.

The model extends traditional credit instruments with additional degrees of freedom.

Abstract

Quantum models based on the mathematics of quantum mechanics (QM) have been developed in cognitive sciences, game theory and econophysics. In this work a generalization of credit loans is introduced by using the vector space formalism of QM. Operators for the debt, amortization, interest and periodic installments are defined and its mean values in an arbitrary orthonormal basis of the vectorial space give the corresponding values at each period of the loan. Endowing the vector space of dimension M, where M is the loan duration, with a SO(M) symmetry, it is possible to rotate the eigenbasis to obtain better schedule periodic payments for the borrower, by using the rotation angles of the SO(M) transformation. Given that a rotation preserves the length of the vectors, the total amortization, debt and periodic installments are not changed. For a general description of the formalism introduced, the loan operator relations are given in terms of a generalized Heisenberg algebra, where finite dimensional representations are considered and commutative operators are defined for the specific loan types. The results obtained are an improvement of the usual financial instrument of credit because introduce several degrees of freedom through the rotation angles, which allows to select superposition states of the corresponding commutative operators that enables the borrower to tune the periodic installments in order to obtain better benefits without changing what the lender earns.