Global dynamics in a non-linear model of the equity ratio

A model for firmsʹ financial conditions is proposed, which ultimately reduces to a two-dimensional non-invertible map in the variables mean and variance of the equity ratio. The possible dynamics of the model and the global behaviour are investigated. We describe the mechanism of bifurcations leading to fractalization of the basins and/or fractalization of their boundaries, showing how a locally stable attractor may be almost globally unstable. Multistability is also investigated. Two, three or four co-existing attractors have been found and we describe the mechanism of bifurcations leading their basins to become chaotically intermingled, and thus to unpredictability of the asymptotic state in a wide region. The knowledge of such regimes, besides those associated with simple dynamics, may be of help for the operators. While the use of the technical tools we propose to study the global dynamics and bifurcations may be of help for further investigations.