Investigation of Egyptian Banks’ Competition through a Riesz–Caputo Fractional Model

Abstract

In this paper, a four-dimensional competition model, driven by the Riesz–Caputo operator, is established. Then, the presented model’s uniqueness, existence, and stability are discussed. After that, the model is applied to describe the profit competition between Egyptian banks. Using the Hamiltonian definition of optimal control, we set a control strategy for banks’ profits during crises as a pre-step measure to counteract their negative impact. Finally, the model is solved numerically using an extended Adams–Bashford scheme. The valid data between the end of 2016 and 2020 are used for numerical simulations, while the data between the end of 2021 and 2022 are used for prediction measurements. From the results, it can be seen that the COVID-19 crisis resulted in a sudden decrease in banks’ profits during 2020, and if there were a control system enabled, it could have compensated for this decrease.

Keywords

• competition modeling
• fractional Riesz–Caputo
• optimal control
• numerical algorithms