Artificial intelligence and systemic risk

Jon Danielsson, Robert Macrae and Andreas Uthemann

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: 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.

Keywords: UKRI; fund (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2022-07-01
New Economics Papers: this item is included in nep-big, nep-cmp, nep-cwa, nep-fdg, nep-ore and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published in Journal of Banking and Finance, 1, July, 2022, 140. ISSN: 0378-4266

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http://eprints.lse.ac.uk/111601/ Open access version. (application/pdf)

Related works:
Journal Article: Artificial intelligence and systemic risk (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:111601

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