From fiction to fact: the growing role of generative AI in business and finance
The article explores generative AI's impact on business and finance, highlighting applications, benefits, challenges, and future research.
What it examines
This study explores the transformative impact of generative AI in business and finance, focusing on its applications, benefits, and challenges. It aims to evaluate generative AI tools like ChatGPT in predicting corporate sentiment and their implications for risk management and stock performance.
What it concludes
The study concludes that generative AI can significantly enhance financial market efficiency and decision-making. Potential applications include improved risk management and investment strategies. Future research should address ethical concerns, data security, and regulatory frameworks to maximize AI's benefits while mitigating its risks.
Evidence objects
The study concludes that generative AI can significantly enhance financial market efficiency and decision-making. Potential applications include improved risk management and investment strategies. Future research should address ethical concerns, data security, and regulatory frameworks to maximize AI's benefits while mitigating its risks.
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Raw abstract and provenance
ABSTRACT Generative Artificial Intelligence (AI), such as ChatGPT by OpenAI, has revolutionized the business world, with benefits including improved accessibility, efficiency, and cost reduction. This article reviews recent developments of generative AI in business and finance, summarizes its practical applications, provides examples of the latest generative AI tools, and demonstrates that generative AI can revolutionize data analysis in industry and academia. To test the ability of generative AI to support decision-making in financial markets, we use the ChatGPT to capture corporate sentiments towards environmental policy by inputting text extracted from corporate financial statements. Our results demonstrate that the sentiment scores generated by ChatGPT can predict firms’ risk-management capabilities and stock return performance. This study also highlights the potential challenges and limitations associated with generative AI. Finally, we propose several questions for future research at the intersection of generative AI with business and finance.
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