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Artificial intelligence and relationship lending

Author

Listed:
  • Leonardo Gambacorta

    (Bank for International Settlements; CEPR)

  • Fabiana Sabatini

    (Bank of Italy)

  • Stefano Schiaffi

    (Bank of Italy)

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.

Suggested Citation

  • Leonardo Gambacorta & Fabiana Sabatini & Stefano Schiaffi, 2025. "Artificial intelligence and relationship lending," Temi di discussione (Economic working papers) 1476, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1476_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2025/2025-1476/en_tema_1476.pdf
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    More about this item

    Keywords

    artificial intelligence; machine learning; credit supply; relationship lending;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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