Artificial Intelligence and Credit Risk Evaluation: Balancing Innovation and Ethics for Equitable Lending

Abstract

As Artificial Intelligence (AI) technologies become increasingly embedded in financial services, their use in credit risk evaluation stands out as both transformative and controversial. AI offers unparalleled capabilities in analyzing complex datasets to assess borrower risk with higher precision and efficiency than traditional models. However, its deployment raises pressing ethical and operational questions that challenge the pursuit of financial justice. This article investigates how AI reshapes credit risk evaluation, emphasizing the delicate balance between leveraging technological innovation and maintaining ethical integrity. By exploring case studies, regulatory developments, and the socio-economic impacts of AI-driven credit decisions, the article aims to provide a comprehensive framework for building transparent, fair, and inclusive credit systems.