Artificial intelligence and systemic risk

Artificial intelligence (AI) is rapidly changing how the financial system is operated, taking over core functions for both cost savings and operational efficiency reasons. AI will assist both risk managers and the financial authorities. However, it can destabilize the financial system, creating new...

Full description

Saved in:
Bibliographic Details
Published in:Journal of banking & finance 2022-07, Vol.140, p.106290, Article 106290
Main Authors: Daníelsson, Jón, Macrae, Robert, Uthemann, Andreas
Format: Article
Language:English
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Artificial intelligence (AI) is rapidly changing how the financial system is operated, taking over core functions for both cost savings and operational efficiency reasons. AI will assist both risk managers and the financial authorities. However, it can destabilize the financial system, creating new tail risks and amplifying existing ones due to procyclicality, unknown-unknowns, the need for trust, and optimization against the system.
ISSN:0378-4266
1872-6372
DOI:10.1016/j.jbankfin.2021.106290