Debt Traps - A Risk Participative Loom for Reduction of Default Risk using Numeric Game Theory

Abstract

Collaboration modeled as risk participation tends to reduce default risk and measures achievement within volatility parameters. This stimulates stakeholders to ensure regular repayment and build capability to create sustainable livelihoods for borrowers and profitable credit portfolios for lenders. This study attempts to create a working model of knowledge and education delivery system (Dr. Amartya Sen’s “Capability Maturity Model”) which not only analyzes credit default from a borrower’s perspective, but also seeks to mitigate a larger evil “SOCIAL EXCLUSION” (associated with loan default) that causes disequilibrium in poor tribal lives (Women). The model capitalizes associated variables using an analytical method to reduce default risks and applies the same to arrive at an equilibrium as per game theoretic approach. Using numerical analysis, the model seeks to identify risk dependency reductions in tribal Microfinance.