IDEAS home Printed from https://ideas.repec.org/p/ecb/ecbwps/20263262.html

A SPOT in the dark: using AI to assess financial stability risks

Author

Listed:
  • Kellner, Domenic
  • Lang, Jan Hannes
  • Rusnák, Marek
  • Nagy, Lukas Joseph

Abstract

Financial stability risks consist of two distinct components: vulnerabilities and possible trigger events. While there has been considerable progress regarding the measurement of vulnerabilities, the assessment of possible trigger events remains largely qualitative. To fill this gap, we employ Large Language Models to extract information about the Severity and Probability Of potential Trigger events (SPOT) from a large dataset of financial news articles over the period2005 – 2026. The SPOT indicator increases ahead of major historical trigger events, correctly identifies trigger sources, and helps to improve forward looking model estimates of downside risks to the economy. The results indicate that the use of AI-based signal extraction from text can be a promising avenue to improve the monitoring of financial stability risks. JEL Classification: C55, C88, E32, E44, G01

Suggested Citation

  • Kellner, Domenic & Lang, Jan Hannes & Rusnák, Marek & Nagy, Lukas Joseph, 2026. "A SPOT in the dark: using AI to assess financial stability risks," Working Paper Series 3262, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20263262
    Note: 2731285
    as

    Download full text from publisher

    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp3262~7169a94638.en.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises

    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:ecb:ecbwps:20263262. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Official Publications (email available below). General contact details of provider: https://edirc.repec.org/data/emieude.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.