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Enhancing Financial Sentiment Analysis via Retrieval Augmented Large Language Models

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  • Boyu Zhang
  • Hongyang Yang
  • Tianyu Zhou
  • Ali Babar
  • Xiao-Yang Liu

Abstract

Financial sentiment analysis is critical for valuation and investment decision-making. Traditional NLP models, however, are limited by their parameter size and the scope of their training datasets, which hampers their generalization capabilities and effectiveness in this field. Recently, Large Language Models (LLMs) pre-trained on extensive corpora have demonstrated superior performance across various NLP tasks due to their commendable zero-shot abilities. Yet, directly applying LLMs to financial sentiment analysis presents challenges: The discrepancy between the pre-training objective of LLMs and predicting the sentiment label can compromise their predictive performance. Furthermore, the succinct nature of financial news, often devoid of sufficient context, can significantly diminish the reliability of LLMs' sentiment analysis. To address these challenges, we introduce a retrieval-augmented LLMs framework for financial sentiment analysis. This framework includes an instruction-tuned LLMs module, which ensures LLMs behave as predictors of sentiment labels, and a retrieval-augmentation module which retrieves additional context from reliable external sources. Benchmarked against traditional models and LLMs like ChatGPT and LLaMA, our approach achieves 15\% to 48\% performance gain in accuracy and F1 score.

Suggested Citation

  • Boyu Zhang & Hongyang Yang & Tianyu Zhou & Ali Babar & Xiao-Yang Liu, 2023. "Enhancing Financial Sentiment Analysis via Retrieval Augmented Large Language Models," Papers 2310.04027, arXiv.org, revised Nov 2023.
  • Handle: RePEc:arx:papers:2310.04027
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    References listed on IDEAS

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    1. Pekka Malo & Ankur Sinha & Pekka Korhonen & Jyrki Wallenius & Pyry Takala, 2014. "Good debt or bad debt: Detecting semantic orientations in economic texts," Journal of the Association for Information Science & Technology, Association for Information Science & Technology, vol. 65(4), pages 782-796, April.
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    Cited by:

    1. Ardekani, Aref Mahdavi & Bertz, Julie & Bryce, Cormac & Dowling, Michael & Long, Suwan(Cheng), 2024. "FinSentGPT: A universal financial sentiment engine?," International Review of Financial Analysis, Elsevier, vol. 94(C).
    2. Baptiste Lefort & Eric Benhamou & Jean-Jacques Ohana & David Saltiel & Beatrice Guez, 2024. "Optimizing Performance: How Compact Models Match or Exceed GPT's Classification Capabilities through Fine-Tuning," Papers 2409.11408, arXiv.org.
    3. Haowei Ni & Shuchen Meng & Xupeng Chen & Ziqing Zhao & Andi Chen & Panfeng Li & Shiyao Zhang & Qifu Yin & Yuanqing Wang & Yuxi Chan, 2024. "Harnessing Earnings Reports for Stock Predictions: A QLoRA-Enhanced LLM Approach," Papers 2408.06634, arXiv.org, revised Nov 2024.

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