Artificial intelligence and systemic risk

Danielsson, Jon ORCID: 0009-0006-9844-7960, Macrae, Robert and Uthemann, Andreas ORCID: 0000-0002-7942-8530 (2022) Artificial intelligence and systemic risk. Journal of Banking and Finance, 140. ISSN 0378-4266

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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.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/journal-of-b...
Additional Information:	© 2021 The Authors
Divisions:	Finance Systemic Risk Centre
Subjects:	H Social Sciences > HG Finance
Date Deposited:	17 Aug 2021 09:21
Last Modified:	12 Dec 2024 02:37
URI:	http://eprints.lse.ac.uk/id/eprint/111601

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