Artificial intelligence and systemic risk

Jon Danielsson, Robert Macrae and Andreas Uthemann

Journal of Banking & Finance, 2022, vol. 140, issue C

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.

Date: 2022
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Working Paper: Artificial intelligence and systemic risk (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:140:y:2022:i:c:s0378426621002466

DOI: 10.1016/j.jbankfin.2021.106290

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