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ChatGPT and the banking business: Insights from the US stock market on potential implications for banks

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  • Beckmann, Lars
  • Hark, Paul F.

Abstract

Technological advances in artificial intelligence, such as ChatGPT, promise significant potential for automation in the banking sector, but might also be associated with uncertainties and potential disadvantages for banks. By empirically analyzing US stock market reactions to ChatGPT’s launch, this study extracts the expectations of market participants to gauge potential future implications of ChatGPT for banks. The results indicate a significant negative stock market reaction of US bank stocks, with notable disparities between different bank types. Using cross-sectional regressions, we find that the negative market reaction is more pronounced for deposit-dependent and large banks.

Suggested Citation

  • Beckmann, Lars & Hark, Paul F., 2024. "ChatGPT and the banking business: Insights from the US stock market on potential implications for banks," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324002678
    DOI: 10.1016/j.frl.2024.105237
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    Cited by:

    1. Ma, Feng & Lyu, Zhichong & Li, Haibo, 2024. "Can ChatGPT predict Chinese equity premiums?," Finance Research Letters, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    AI; Banking; ChatGPT; Event study; Financial intermediation; Large language model;
    All these keywords.

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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