IDEAS home Printed from https://ideas.repec.org/a/onb/oenbfs/y2025i50b1.html

Good AI – bad for banks?

Author

Listed:
  • Stefan Kerbl

    (Oesterreichische Nationalbank, On-Site Banking Inspections Division – Large Banks)

Abstract

Artificial intelligence is the new buzzword – and with good reason: It is reshaping the world around us. With the financial sector being particularly suited for the use of AI, we are called upon to examine the implications of AI use for financial stability. In this paper, we take a closer look at the financial stability risks that arise as banks, nonbank financial institutions, borrowers and society as a whole embrace the new technology. To do so, we compare the findings of five renowned financial institutions and discuss four different AI scenarios.

Suggested Citation

  • Stefan Kerbl, 2025. "Good AI – bad for banks?," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 50, pages 1-13.
    • Handle: RePEc:onb:oenbfs:y:2025:i:50:b:1
    as

    Download full text from publisher

    File URL: https://www.oenb.at/dam/jcr:b5f7c75b-c6f5-464f-a0b8-c1ea05394cc6/FSR-50_Good-AI-bad-for-banks.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kahneman, Daniel & Schkade, David & Sunstein, Cass R, 1998. "Shared Outrage and Erratic Awards: The Psychology of Punitive Damages," Journal of Risk and Uncertainty, Springer, vol. 16(1), pages 49-86, April.
    2. Scharfstein, David S & Stein, Jeremy C, 1990. "Herd Behavior and Investment," American Economic Review, American Economic Association, vol. 80(3), pages 465-479, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christiane Goodfellow & Dirk Schiereck & Steffen Wippler, 2013. "Are behavioural finance equity funds a superior investment? A note on fund performance and market efficiency," Journal of Asset Management, Palgrave Macmillan, vol. 14(2), pages 111-119, April.
    2. Chang, Eric C. & Cheng, Joseph W. & Khorana, Ajay, 2000. "An examination of herd behavior in equity markets: An international perspective," Journal of Banking & Finance, Elsevier, vol. 24(10), pages 1651-1679, October.
    3. Gu, Chen & Guo, Xu & Zhang, Chengping, 2022. "Analyst target price revisions and institutional herding," International Review of Financial Analysis, Elsevier, vol. 82(C).
    4. Tom Coupé & Valérie Smeets & Frédéric Warzynski, 2006. "Incentives, Sorting and Productivity along the Career: Evidence from a Sample of Top Economists," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 22(1), pages 137-167, April.
    5. Edward M. Graham & Paul R. Krugman, 1993. "The Surge in Foreign Direct Investment in the 1980s," NBER Chapters, in: Foreign Direct Investment, pages 13-36, National Bureau of Economic Research, Inc.
    6. Wei He & Qian Wang, 2020. "The peer effect of corporate financial decisions around split share structure reform in China," Review of Financial Economics, John Wiley & Sons, vol. 38(3), pages 474-493, July.
    7. Jason Aimone & Sheryl Ball & Brooks King-Casas, 2015. "The Betrayal Aversion Elicitation Task: An Individual Level Betrayal Aversion Measure," PLOS ONE, Public Library of Science, vol. 10(9), pages 1-12, September.
    8. Beckmann, Michael, 2000. "Unternehmenspolitik, Managerkontrolle und Personalabbau in Deutschland : theoretische Ansätze und empirische Analyse mit Daten des IAB-Betriebspanels (Corporate policy, manager control and staff reduc," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 33(4), pages 594-608.
    9. Du, Qianqian & Yu, Frank & Yu, Xiaoyun, 2026. "Understanding outlier opinions: Evidence from financial analysts," Journal of Corporate Finance, Elsevier, vol. 97(C).
    10. Kunal Sengupta & Amal Sanyal, 2004. "Delegation in a Cheap-Talk Game: A Voting Example," Econometric Society 2004 Far Eastern Meetings 471, Econometric Society.
    11. Reveley Callum & Shanaev Savva & Bin Yu & Panta Humnath & Ghimire Binam, 2023. "Analyst herding—whether, why, and when? Two new tests for herding detection in target forecast prices," Economics and Business Review, Sciendo, vol. 9(4), pages 25-55, December.
    12. AltInkIlIç, Oya & Hansen, Robert S., 2009. "On the information role of stock recommendation revisions," Journal of Accounting and Economics, Elsevier, vol. 48(1), pages 17-36, October.
    13. Goethner, Maximilian & Hornuf, Lars & Regner, Tobias, 2021. "Protecting investors in equity crowdfunding: An empirical analysis of the small investor protection act," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    14. Gugler, Klaus & Peev, Evgeni & Segalla, Esther, 2013. "The internal workings of internal capital markets: Cross-country evidence," Journal of Corporate Finance, Elsevier, vol. 20(C), pages 59-73.
    15. Bohl, Martin T. & Branger, Nicole & Trede, Mark, 2017. "The case for herding is stronger than you think," Journal of Banking & Finance, Elsevier, vol. 85(C), pages 30-40.
    16. Aleksei Smirnov & Egor Starkov, 2019. "Timing of predictions in dynamic cheap talk: experts vs. quacks," ECON - Working Papers 334, Department of Economics - University of Zurich.
    17. D'Arcangelis, Anna Maria & Rotundo, Giulia, 2021. "Herding in mutual funds: A complex network approach," Journal of Business Research, Elsevier, vol. 129(C), pages 679-686.
    18. Yun‐chien Chang & Theodore Eisenberg & Han‐Wei Ho & Martin T. Wells, 2015. "Pain and Suffering Damages in Wrongful Death Cases: An Empirical Study," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 12(1), pages 128-160, March.
    19. G. Rejikumar & Aswathy Asokan-Ajitha & Sofi Dinesh & Ajay Jose, 2022. "The role of cognitive complexity and risk aversion in online herd behavior," Electronic Commerce Research, Springer, vol. 22(2), pages 585-621, June.
    20. Matthew Plosser & João A. C. Santos, 2014. "Banks' incentives and the quality of internal risk models," Staff Reports 704, Federal Reserve Bank of New York.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:onb:oenbfs:y:2025:i:50:b:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stefan W. Schmitz (email available below). General contact details of provider: https://edirc.repec.org/data/oenbbat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.