Abstract
A dynamical system is one of sophisticated techniques using mathematical equations that can determine the observed state for all future times based on the current state. It will also show small changes in the state of the system create either small or big changes in the future depending on the model. This is called stability analysis of a dynamical system. In this research we use a modified Monti-Klein profit equation and develop a dynamical system of the form: dD/dt=f(t,D,L,r_D,r_L) dD/dt=f(t,D,L,r_D,r_L) Here D and r_D are the volume of deposit and its rate, L and r_L are the volume of loan and its rate, and r is the interbank market rate. One system of determining the interest rate is a floating system that is to follow the state of the market. At a particular period of time, we analyze the stability behavior of the solutions numerically when the rates of loan and deposit follow sinus and cosines functions in various combinations. It concludes that the stability behavior of their equilibrium will be similar when the rates of deposit and interbank market are the similar functions. This reflects the state of a downward-sloping demand for loans with respect to the loan rate and an upward-sloping demand for deposits with respect to the deposit rate.
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