IDEAS home Printed from https://ideas.repec.org/p/toh/tupdaa/44.html
   My bibliography  Save this paper

Financial Systemic Risk behind Artificial Intelligence:Evidence from China

Author

Listed:
  • Jingyi Tian
  • Jun Nagayasu

Abstract

As an important domain of information technology development, artificial intelligence (AI) has garnered significant popularity in the financial sector. While AI offers numerous advantages, investigating potential risks associated with the widespread use of AI has become a critical point for researchers. We examine the impact of AI technologies on systemic risk within China’s financial industry. Our findings suggest that AI helps mitigate the increase of systemic risk. However, the impact of AI differs across different financial sectors and is more pronounced during crisis periods. Our study also suggests that AI can decrease systemic risk by enhancing the human capital of financial firms. Moreover, the theoretical framework presented in this paper provides insights into the notion that imprudent allocation of AI-related investment could potentially contribute to an increase in systemic risk.

Suggested Citation

  • Jingyi Tian & Jun Nagayasu, 2023. "Financial Systemic Risk behind Artificial Intelligence:Evidence from China," TUPD Discussion Papers 44, Graduate School of Economics and Management, Tohoku University.
    • Handle: RePEc:toh:tupdaa:44
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10097/0002000321
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Taylor, Alan M. & Dube, Arindrajit & Girardi, Daniele & Jordà , Òscar, 2023. "A Local Projections Approach to Difference-in-Differences Event Studies," CEPR Discussion Papers 18141, C.E.P.R. Discussion Papers.
    2. Koji Murayama & Jun Nagayasu & Lamia Bazzaoui, 2022. "Spatial Dependence, Social Networks, and Economic Structures in Japanese Regional Labor Migration," Sustainability, MDPI, vol. 14(3), pages 1-31, February.
    3. Shuang Gao & Shaojian Wang & Dongqi Sun, 2021. "Development Zones and Their Surrounding Host Cities in China: Isolation and Mutually Beneficial Interactions," Land, MDPI, vol. 11(1), pages 1-14, December.
    4. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    5. Chiara Criscuolo & Ralf Martin & Henry G. Overman & John Van Reenen, 2019. "Some Causal Effects of an Industrial Policy," American Economic Review, American Economic Association, vol. 109(1), pages 48-85, January.
    6. Hongjie Wang & Xiaolu Gao & Zening Xu & Yuan Li & Xinyue Zhang & Mark W. Rosenberg, 2022. "Exploring the Climate Temperature Effects on Settlement Intentions of Older Migrants: Evidence from China," IJERPH, MDPI, vol. 19(8), pages 1-15, April.
    7. Zheng, Siqi & Sun, Weizeng & Wu, Jianfeng & Kahn, Matthew E., 2017. "The birth of edge cities in China: Measuring the effects of industrial parks policy," Journal of Urban Economics, Elsevier, vol. 100(C), pages 80-103.
    8. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    9. Huang, Daisy J. & Leung, Charles K. & Qu, Baozhi, 2015. "Do bank loans and local amenities explain Chinese urban house prices?," China Economic Review, Elsevier, vol. 34(C), pages 19-38.
    10. Arindrajit Dube & Daniele Girardi & Òscar Jordà & Alan M. Taylor, 2023. "A Local Projections Approach to Difference-in-Differences," NBER Working Papers 31184, National Bureau of Economic Research, Inc.
    11. Xi, Qiangmin & Sun, Ruidong & Mei, Lin, 2021. "The impact of special economic zones on producer services productivity: Evidence from China," China Economic Review, Elsevier, vol. 65(C).
    12. Keisuke Kondo & Toshihiro Okubo, 2015. "Interregional labour migration and real wage disparities: Evidence from Japan," Papers in Regional Science, Wiley Blackwell, vol. 94(1), pages 67-87, March.
    13. Thorsten Beck & Ross Levine & Alexey Levkov, 2010. "Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States," Journal of Finance, American Finance Association, vol. 65(5), pages 1637-1667, October.
    14. Givord, Pauline & Rathelot, Roland & Sillard, Patrick, 2013. "Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 151-163.
    15. Ning Jia & Raven Molloy & Christopher Smith & Abigail Wozniak, 2023. "The Economics of Internal Migration: Advances and Policy Questions," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 144-180, March.
    16. Augusto Cerqua & Guido Pellegrini & Ornella Tarola, 2022. "Can regional policies shape migration flows?," Papers in Regional Science, Wiley Blackwell, vol. 101(3), pages 515-536, June.
    17. Yi Lu & Jin Wang & Lianming Zhu, 2019. "Place-Based Policies, Creation, and Agglomeration Economies: Evidence from China's Economic Zone Program," American Economic Journal: Economic Policy, American Economic Association, vol. 11(3), pages 325-360, August.
    18. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    19. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    20. Whalley, John & Zhang, Shunming, 2007. "A numerical simulation analysis of (Hukou) labour mobility restrictions in China," Journal of Development Economics, Elsevier, vol. 83(2), pages 392-410, July.
    21. Auerbach, Alan J & Kotlikoff, Laurence J, 1987. "Evaluating Fiscal Policy with a Dynamic Simulation Model," American Economic Review, American Economic Association, vol. 77(2), pages 49-55, May.
    22. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    23. Jiabo Xu & Xingping Wang, 2020. "Reversing Uncontrolled and Unprofitable Urban Expansion in Africa through Special Economic Zones: An Evaluation of Ethiopian and Zambian Cases," Sustainability, MDPI, vol. 12(21), pages 1-20, November.
    24. Deming Luo & Yanjun Liu & Yiyun Wu & Xiwei Zhu & Xiangrong Jin, 2015. "Does development zone have spillover effect in China?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 20(3), pages 489-516, July.
    25. Wang, Jin, 2013. "The economic impact of Special Economic Zones: Evidence from Chinese municipalities," Journal of Development Economics, Elsevier, vol. 101(C), pages 133-147.
    26. Banerjee, Biswajit & Kanbur, S M, 1981. "On the Specification and Estimation of Macro Rural-Urban Migration Functions: With an Application to Indian Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 43(1), pages 7-29, February.
    27. Davis, Morris A. & Fisher, Jonas D.M. & Veracierto, Marcelo, 2021. "Migration and urban economic dynamics," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    28. John Gardner, 2022. "Two-stage differences in differences," Papers 2207.05943, arXiv.org.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cui, Yi, 2024. "Place-based policies and capital misallocation: Evidence from Chinese cities," Economic Systems, Elsevier, vol. 48(4).
    2. Sun, Yajie & Liao, Wen-Chi, 2021. "Resource-Exhausted City Transition to continue industrial development," China Economic Review, Elsevier, vol. 67(C).
    3. Fang, Guanfu & Gao, Tiantian & Xu, Peng, 2024. "Beyond the borders: Estimating the effect of China's Bonded Zones on innovation and its spillovers," China Economic Review, Elsevier, vol. 83(C).
    4. Kong, Dongmin & Liu, Chenhao & Ye, Wenxu, 2023. "Randomized inspection and firm's government subsidies: A natural experiment in China," China Economic Review, Elsevier, vol. 82(C).
    5. Leek, Lauren Caroline & Bischl, Simeon, 2024. "How Central Bank Independence Shapes Monetary Policy Communication: A Large Language Model Application," SocArXiv yrhka, Center for Open Science.
    6. Leek, Lauren Caroline & Bischl, Simeon, 2024. "How Central Bank Independence Shapes Monetary Policy Communication: A Large Language Model Application," SocArXiv yrhka_v1, Center for Open Science.
    7. Görg, Holger & Mulyukova, Alina, 2024. "Place-based policies and firm performance: Evidence from Special Economic Zones in India," European Economic Review, Elsevier, vol. 165(C).
    8. Zhao, Chuanmin & Qu, Xi, 2024. "Place-based policies, rural employment, and intra-household resources allocation: Evidence from China’s economic zones," Journal of Development Economics, Elsevier, vol. 167(C).
    9. Sun, Chuanwang & Zhan, Yanhong & Du, Gang, 2020. "Can value-added tax incentives of new energy industry increase firm's profitability? Evidence from financial data of China's listed companies," Energy Economics, Elsevier, vol. 86(C).
    10. Mark Kattenberg & Bas Scheer & Jurre Thiel, 2023. "Causal forests with fixed effects for treatment effect heterogeneity in difference-in-differences," CPB Discussion Paper 452, CPB Netherlands Bureau for Economic Policy Analysis.
    11. Deng, Liuchun & Müller, Steffen & Plümpe, Verena & Stegmaier, Jens, 2024. "Robots, occupations, and worker age: A production-unit analysis of employment," European Economic Review, Elsevier, vol. 170(C).
    12. Zheng, Liang, 2021. "Job creation or job relocation? Identifying the impact of China's special economic zones on local employment and industrial agglomeration," China Economic Review, Elsevier, vol. 69(C).
    13. Lingfan Yang & Xiaolong Luo & Ziyao Ding & Xiaoman Liu & Zongni Gu, 2022. "Restructuring for Growth in Development Zones, China: A Systematic Literature and Policy Review (1984–2022)," Land, MDPI, vol. 11(7), pages 1-32, June.
    14. Casagrande, Dieison & Emanuel, Lucas & Freitas, Carlos & Lima, Alex & Nishimura, Fábio & Oliveira, Felipe, 2024. "Public food procurement and production: Evidence of the food acquisition program in Brazil," Food Policy, Elsevier, vol. 126(C).
    15. Ji, Mianmian & Lv, Wendai, 2022. "Demonstration zones reform and corporate philanthropy: Evidence from China," Economic Modelling, Elsevier, vol. 115(C).
    16. Koh, Yumi & Li, Jing & Wu, Yifan & Yi, Junjian & Zhang, Hanzhe, 2023. "Young Women in Cities," IZA Discussion Papers 16353, Institute of Labor Economics (IZA).
    17. Tien Manh Vu & Hiroyuki Yamada, 2023. "Impacts of enterprise zones on local households in Vietnam," Pacific Economic Review, Wiley Blackwell, vol. 28(5), pages 593-612, December.
    18. Tien Manh Vu & Hiroyuki Yamada, 2021. "Firms and regional favouritism," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(4), pages 711-734, October.
    19. Shiyi Chen & Wanlin Liu & Hong Song & Qing Zhang, 2024. "Government‐led e‐commerce expansion project and rural household income: Evidence and mechanisms," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 150-174, January.
    20. Cheick Camara, 2023. "Gender Budgeting and Health Spending Efficiency in Indian States: A Staggered Difference-in-Differences Analysis," CERDI Working papers hal-04294262, HAL.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:toh:tupdaa:44. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Tohoku University Library (email available below). General contact details of provider: https://edirc.repec.org/data/fetohjp.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.