THE IMPACT OF ARTIFICIAL INTELLIGENCE ON FINANCIAL STABILITY AND SUSTAINABLE FINANCE: EVIDENCE FROM EMERGING MARKETS
DOI:
https://doi.org/10.55640/Keywords:
Artificial Intelligence, Financial Stability, Sustainable Finance, Emerging Markets, Financial Innovation, Risk Management.Abstract
Artificial Intelligence (AI) is increasingly transforming the financial sector by improving operational efficiency, risk assessment, and decision-making processes. While AI offers significant benefits for financial institutions, concerns remain regarding its potential impact on financial stability and sustainable finance.
This study examines the relationship between AI adoption, financial stability, and sustainable finance in emerging markets. Drawing on existing theoretical and empirical literature, it develops a conceptual framework to explore how AI contributes to risk management, financial resilience, and sustainability outcomes. The findings suggest that AI can enhance financial stability through improved predictive analytics, fraud detection, and resource allocation efficiency. In addition, AI supports sustainable finance by strengthening ESG assessment and sustainability-related decision-making. However, inadequate regulation and excessive reliance on AI systems may increase systemic risks and cybersecurity vulnerabilities. The study emphasizes the importance of effective governance and regulatory frameworks to maximize the benefits of AI while mitigating potential risks.
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