Artificial intelligence and relationship lending

Leonardo Gambacorta, Fabiana Sabatini () and Stefano Schiaffi ()
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Fabiana Sabatini: Bank of Italy
Stefano Schiaffi: Bank of Italy

No 1476, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We study the interaction between banks' adoption of artificial intelligence (AI) in credit scoring and relationship lending. Using a unique dataset on Italian banks' investments in AI for the purpose of integrating their credit scoring techniques, matched with credit register data from one year before and one year after the outbreak of the Covid-19 crisis, we find that AI investments help banks mitigate the typical countercyclical effects of relationship lending on firms' credit supply, as well as on their investment and employment decisions.

Keywords: artificial intelligence; machine learning; credit supply; relationship lending (search for similar items in EconPapers)
JEL-codes: E50 G01 G21 (search for similar items in EconPapers)
Date: 2025-02
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