Overview

This project simulates how loan application volume might respond to interest rate changes using the economic concept of price elasticity of demand. It visualizes borrower sensitivity under different scenarios and demonstrates how credit unions can use elasticity to guide loan pricing and strategy.

Key Features

• Two demand models: Elastic (-1.5) and Inelastic (-0.5)
• Realistic simulation of how loan applications decrease as interest rates rise
• Visual comparison with annotated elasticity classifications

Results

• Elastic Demand: Applications drop sharply when rates rise - borrowers are highly sensitive to pricing
• Inelastic Demand: Applications decline slowly - borrowers borrow despite rate hikes, possibly due to necessity or loyalty
• Visual labels ("Elastic", "Inelastic") help interpret behavior over time

Repository and Code

GitHub Repo: dylanomics/Elasticity