How artificial intelligence incidents affect banks and financial services firms? A study of five firms

Isarin Durongkadej, Wenyao Hu and Heng Emily Wang

Finance Research Letters, 2024, vol. 70, issue C

Abstract: We investigate the impact of AI incidents on banking and the financial industries. By analyzing five U.S. banks and financial services firms, we find that the average short-term Cumulative Abnormal Returns (CARs) loss of AI incidents is -21.04 % and the negative impact can spread out to the financial industry with a three-day loss of -0.13 %. Compared to firms without AI incidents, banks and financial services firms with AI incidents have higher bankruptcy risk and lower operational cash flows. To our knowledge, this is the first study analyzing the AI incident impact on the performance of banks and financial services firms.

Keywords: Artificial intelligence; Banks; Financial industry (search for similar items in EconPapers)
JEL-codes: G21 G23 G24 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013084

DOI: 10.1016/j.frl.2024.106279

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