The impact of machine learning and big data on credit markets

Eccles, Peter J.; Grout, Paul A.; Siciliani, Paolo; Zalewska, Anna

doi:10.2139/ssrn.3890364

Cited by 1 publication

(2 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…All these papers discuss scenarios in which traditional banks are subject to regulatory restrictions while their Fintech competitors are non-banking institutions and, therefore, benefit from not facing regulatory constraints determining risk preferences. In contrast, Eccles et al (2021) analyze potential changes in the risk profile of banks when the Fintech innovation happens within the banking industry, that is, some banks adopt new technology to improve the quality of screening of borrowers (e.g., through an adoption of machine learning and Big Data, ML-BD) whereas others do not modernize. However, all the banks, regardless of their level of ML-BD adoption, are subject to the same regulations.…”

Section: Fintechmentioning

confidence: 99%

“…However, all the banks, regardless of their level of ML-BD adoption, are subject to the same regulations. Eccles et al (2021) show that whether the ML-BD adopting banks engage in "cream skimming" or "bottom fishing" depends on many factors (e.g., the quality and cost of the new technology, the mix of less risky and riskier borrowers, etc. ), but the banks' choice of business models will determine the risk profile of the banks that stick to the traditional ways of doing business.…”

Section: Fintechmentioning

confidence: 99%

See 1 more Smart Citation

Bankers' remuneration reforms and new challenges

Zalewska

2022

Corporate Governance

View full text Add to dashboard Cite

Research Question/Issue The desire to structure bankers' remuneration in a way that it is risk sensitive and aligned with the long‐term incentives of their institutions was at the center of the post Global Financial Crisis (GFC) regulatory reforms. A decade later, it is unclear whether the reforms achieved what they were intended for and whether they have resulted in some unintended consequences. The issue of unintended consequences is particularly important given that the banking sector needs to embrace technological innovation (Fintech) and the sustainable banking agenda. Research Findings/Insights We are still far from understanding the real costs and benefits of the remuneration reforms because it is difficult to isolate the impact of remuneration restrictions from the impact other regulations and policies had on restricting risk taking, banking structures and bonus culture. However, even if it is questionable whether the remuneration reforms contributed significantly towards improving the stability of the banking sector, they seem unsuitable for promoting Fintech and the sustainable banking agenda. Theoretical/Academic Implications The post‐GFC remuneration reforms may not sufficiently align bankers with stakeholders' interests which is essential to promote adoption of Fintech and sustainable banking agenda. Practitioner/Policy Implications The lack of in‐depth understanding of the effects of the remuneration reforms creates a barrier to understand the impact of the reforms on how banks innovate to adopt Fintech and the sustainable banking agenda. If the existing remuneration regulation limits the openness to innovation and strategic change, then the regulation needs to be revisited and modified.

show abstract

Section: Fintechmentioning

confidence: 99%

Section: Fintechmentioning

confidence: 99%