Professor Xin Li, from the Department of Information
Systems, with co-authors, has researched into
how natural disasters wreak economic havoc and
cause financial distress for victims. Commercial
loans provided by lending firms play a key role in
helping victims recover from disasters. This research
notes studies whether lenders' use of AI in the
lending process can, through reducing delinquency,
benefit borrowers who experience natural disasters.
Collaborating with a leading credit scoring company,
they track borrowers' loan applications and lenders'
use of customised AI solutions in assessing loan risks.
They find that borrowers who apply to AI-empowered
lenders fare better in reducing delinquency rates after
experiencing natural disasters. Notably, such a disaster
mitigation effect is more pronounced for borrowers
with lower credit scores. They explore the possible
mechanisms at play and discuss the implications of the
findings.
Liu, Yidi; Li, Xin; Zheng, Zhiqiang (Eric). "Smart
Natural Disaster Relief: Assisting Victims with Artificial
Intelligence in Lending." May 2023; In: Information
Systems Research
Reference:
https://pubsonline.informs.org/doi/abs/10.1287/isre.2023.1230?journalCode=isre
