On the fuzzy difference equations of finance

In this paper our intention is to demonstrate the applicability of fuzzy difference equations in the field of finance. In order to achieve that, we follow the work done by Deeba et al. and Papashinopoulos et al. and we study the existence of positive solutions to fuzzy financial difference equations. Initially, we appose a method realized by Buckley that deals with fuzzy analogues of the elementary compound interest problem. Afterwards we approach this cage via the fuzzy difference equations method. After making a comparison between the two methods we notice that they end up to the same general formula. The main contribution of this paper is the simplicity of the method presented, which gives us the opportunity to create formulas for cases, which are specialized and also more realistic than the very basic one of the compound interest. Moreover, by using difference equations we can study the "factors", which cause the change in the value of money, in different time periods. As a source for these cases of finance we use the work of Kwapisz and we study a well-known problem of financial mathematics. This problem deals with the time value of money and as a direct application of it we study the balance of bank deposits. Finally, a numerical example is presented for better understanding. (C) 2008 Published by Elsevier B.V.