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How AI Adoption Might Affect Bank Lending

Author

Listed:
  • Greeshma Avaradi
  • Naomi Halbersleben
  • Zheng Liu
  • Mark M. Spiegel

Abstract

Commercial banks have led the adoption of artificial intelligence (AI) in recent years. Evidence suggests that banks using AI more intensively tend to have higher returns on assets and higher shares of problem loans. Increased AI usage is also associated with declines in the shares of small business lending. This pattern suggests that AI helps banks in processing hard data, such as credit scores and financial statements, and issuing fewer small business loans that rely more on soft information, such as personal and business relationships.

Suggested Citation

  • Greeshma Avaradi & Naomi Halbersleben & Zheng Liu & Mark M. Spiegel, 2026. "How AI Adoption Might Affect Bank Lending," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2026(25), pages 1-6, September.
    • Handle: RePEc:fip:fedfel:103795
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