An artificial intelligence tool could help governments decide whether or not to bail out a bank in crisis by predicting if the intervention will save money for taxpayers in the long term.
The AI tool, developed by researchers at University College London (UCL) and Queen Mary University of London, assesses not only if a bailout is the best strategy for taxpayers, but also suggests how much should be invested in the bank, and which bank or banks should be bailed out at any given time. It is detailed in a new paper to be published today (November 17) in the journal Nature Communications.
Using data from the European Banking Authority, the algorithm was tested by the authors on a network of 35 European financial institutions judged to be the most important to the global financial system. However, it can also be used and calibrated by national banks using detailed proprietary data unavailable to the public.
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