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Middle East and Central Asia > Qatar

You are looking at 1 - 9 of 9 items for :

  • Type: Journal Issue x
  • Financial Institutions and Services: General x
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Cover FinTech Notes
Generative Artificial Intelligence in Finance: Risk Considerations
Mr. Ghiath Shabsigh
and
El Bachir Boukherouaa
In recent years, technological advances and competitive pressures have fueled rapid adoption of artificial intelligence (AI) in the financial sector, and this adoption is set to accelerate with the recent emergence of generative AI (GenAI). GenAI is a significant leap forward in AI technology that enhances its utility for financial institutions that have been quick at adapting it to a broad range of applications. However, there are risks inherent in the AI technology and its application in the financial sector, including embedded bias, privacy concerns, outcome opaqueness, performance robustness, unique cyberthreats, and the potential for creating new sources and transmission channels of systemic risks. GenAI could aggravate some of these risks and bring about new types or risks as well, including for financial sector stability. This paper provides early insights into GenAI’s inherent risks and their potential impact on the financial sector.
Keywords:
artificial intelligence; embedded bias; cybersecurity; fintech; financial risks; financial sector policy and analysis; financial stability; generative; hallucination; machine learning; privacy; synthetic data; sample generative AI application; AI-machine learning; IMF Library; IMF Fintech Note 2023/006; generative artificial intelligence in finance; Financial sector; Global
Cover IMF Working Papers
Structural Reforms and Economic Growth: A Machine Learning Approach
Mr. Anil Ari
,
Gabor Pula
, and
Liyang Sun
The qualitative and granular nature of most structural indicators and the variety in data sources poses difficulties for consistent cross-country assessments and empirical analysis. We overcome these issues by using a machine learning approach (the partial least squares method) to combine a broad set of cross-country structural indicators into a small number of synthetic scores which correspond to key structural areas, and which are suitable for consistent quantitative comparisons across countries and time. With this newly constructed dataset of synthetic structural scores in 126 countries between 2000-2019, we establish stylized facts about structural gaps and reforms, and analyze the impact of reforms targeting different structural areas on economic growth. Our findings suggest that structural reforms in the area of product, labor and financial markets as well as the legal system have a significant impact on economic growth in a 5-year horizon, with one standard deviation improvement in one of these reform areas raising cumulative 5-year growth by 2 to 6 percent. We also find synergies between different structural areas, in particular between product and labor market reforms.
Keywords:
Structural reforms; institutions; economic growth; C. PLS estimation procedure; machine learning approach; Gabor pula; Liyang sun; labor market composite; Business environment; Labor markets; Machine learning; Labor market reforms; Global
Cover IMF Staff Country Reports
People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Implications of Fintech for the Regulation and Supervision of the Financial Sector
International Monetary Fund. Monetary and Capital Markets Department
he Hong Kong Special Administrative Region (HKSAR) is among the world’s major fintech hubs, well positioned to develop fintech initiatives from its traditional strengths in financial services. Key factors enabling the HKSAR to emerge as a fintech hub include its presence as an international financial center, its free-flowing talent and capital, a highly developed information and technology communication (ITC) infrastructure, and its most unique trait, a geographical and strategic advantage by proximity to the market in Mainland China.
Keywords:
People's Republic of China-Hong Kong Special Administrative Region FSAP; banking Supervision department; Hong Kong exchange; People's republic of china-Hong kong special administrative region; banking ordinance; Fintech; Blockchain and DLT; Financial sector; Artificial intelligence; Global
Cover IMF Working Papers
Quantum Computing and the Financial System: Spooky Action at a Distance?
Mr. Michael Gorbanyov
,
Majid Malaika
, and
Tahsin Saadi Sedik
The era of quantum computing is about to begin, with profound implications for the global economy and the financial system. Rapid development of quantum computing brings both benefits and risks. Quantum computers can revolutionize industries and fields that require significant computing power, including modeling financial markets, designing new effective medicines and vaccines, and empowering artificial intelligence, as well as creating a new and secure way of communication (quantum Internet). But they would also crack many of the current encryption algorithms and threaten financial stability by compromising the security of mobile banking, e-commerce, fintech, digital currencies, and Internet information exchange. While the work on quantum-safe encryption is still in progress, financial institutions should take steps now to prepare for the cryptographic transition, by assessing future and retroactive risks from quantum computers, taking an inventory of their cryptographic algorithms (especially public keys), and building cryptographic agility to improve the overall cybersecurity resilience.
Keywords:
quantum computing; quantum-safe encryption; cybersecurity; fintech.; fintech; functioning quantum computer; computing technology; quantum machine; encryption standard; hardware capability; cloud service; Computer science; Migration; Financial sector; Global
Cover IMF Working Papers
How Do Member Countries Receive IMF Policy Advice: Results from a State-of-the-art Sentiment Index
Ms. Ghada Fayad
,
Chengyu Huang
,
Yoko Shibuya
, and
Peng Zhao
This paper applies state-of-the-art deep learning techniques to develop the first sentiment index measuring member countries’ reception of IMF policy advice at the time of Article IV Consultations. This paper finds that while authorities of member countries largely agree with Fund advice, there is variation across country size, external openness, policy sectors and their assessed riskiness, political systems, and commodity export intensity. The paper also looks at how sentiment changes during and after a financial arrangement or program with the Fund, as well as when a country receives IMF technical assistance. The results shed light on key aspects on Fund surveillance while redefining how the IMF can view its relevance, value added, and traction with its member countries.
Keywords:
WP; IMF Policy advice; commodity price; Fund advice; IMF increase fund traction; IMF quota; sentiment index; policy advice; Fund policy assessment; IMF member countries' reception; increase fund traction; IMF member countries' reception of Fund advice; IMF article IV staff report; Commodity price fluctuations; Machine learning; Financial sector; Financial Sector Assessment Program; Commodity prices; Global; Surveillance; Economic Policy; Sentiment Analysis; Natural Language Processing
Cover IMF Working Papers
Machine Learning and Causality: The Impact of Financial Crises on Growth
Mr. Andrew J Tiffin
Machine learning tools are well known for their success in prediction. But prediction is not causation, and causal discovery is at the core of most questions concerning economic policy. Recently, however, the literature has focused more on issues of causality. This paper gently introduces some leading work in this area, using a concrete example—assessing the impact of a hypothetical banking crisis on a country’s growth. By enabling consideration of a rich set of potential nonlinearities, and by allowing individually-tailored policy assessments, machine learning can provide an invaluable complement to the skill set of economists within the Fund and beyond.
Keywords:
WP; machine-learning literature; instrumental-variables approach; treatment variable; confidence interval; ML technique; Supervised machine learning; causal inference; policy evaluation; counterfactual prediction; randomized experiments; treatment effects; banking crisis; financial crisis; B. machine learning; machine learning tool; machine-learning modification; RF algorithm; machine-learning model; Machine learning; Exchange rate flexibility; Global
Cover Policy Papers
Gulf Cooperation Council: Trade and Foreign Investment—Keys to Diversification and Growth in the GCC
International Monetary Fund
Diversification of the GCC economies, supported by greater openness to trade and higher foreign investment, can have a large impact on growth. Such measures can support higher, sustained, and more inclusive growth by improving the allocation of resources across sectors and producers, creating jobs, triggering technology spillovers, promoting knowledge, creating a more competitive business environment, and enhancing productivity. The GCC countries are open to trade, but much less so to foreign direct investment (FDI). GCC foreign trade has been expanding robustly, but FDI inflows have stalled in recent years despite policy efforts taken to reduce administrative barriers and provide incentives to attract FDI. Tariffs are relatively low; however, a number of non-tariff barriers to trade persist and there are substantial restrictions on foreign ownership of businesses and real estate. The growth impact of closing export and FDI gaps could be significant. In most countries, the biggest boost to growth would come from closing the FDI gap—up to one percentage point increase in real non-oil per capita GDP growth. Closing export gaps could provide an additional growth dividend in the range of 0.2-0.5 percentage point. Boosting non-oil exports and attracting more FDI requires a supportive policy environment. Policy priorities are to upgrade human capital, increase productivity and competitiveness, improve the business climate, and reduce remaining barriers to foreign trade and investment. Specifically, continued reforms in the following areas will be important: • Human capital development: continue with investments made to raise educational quality to provide knowledge and skills upgrade. • Labor market reforms: aim to improve productivity and boost competitiveness of the non-oil economy. • Legal frameworks: ensure predictability and protection; efforts should include enhancing minority investor protection and dispute resolution; implementing anti-bribery and integrity measures. • Business climate reforms: focus on further liberalizing foreign ownership regulations and strengthening corporate governance; and on further reducing non-tariff trade barriers by streamlining and automating border procedures and streamlining administrative processes for issuing permits.
Keywords:
PP; GCC country; FDI inflow; GCC economy; GCC government; export gap; FDI gap; Foreign direct investment; Exports; Trade barriers; Export diversification; Business environment; Global
Cover Policy Papers
Guidance Note for Article IV Consultations
International Monetary Fund
This note provides guidance to staff on the conduct of surveillance in the context of Article IV consultations, a core activity of the Fund. Surveillance involves the continuous monitoring of members‘ economic and financial policies and their impact on their own and global stability. During Article IV consultations, staff holds pointed discussions with country authorities on the economic situation, the authorities‘ policies and how these affect the country‘s stability, the role of potential or actual spillovers where relevant, and desirable policy adjustments. These discussions are then reported to the Fund‘s Executive Board for its consideration. The goal, through thorough analysis, candid discussions, and a peer-review mechanism, is to promote the stability of members‘ economies, as well as the effective operation of the international monetary system, including through maintaining global stability.
Keywords:
PP; Article IV consultation; balance of payments stability; staff report; policy note; consultation meeting; country authorities; policy adjustment; Policy discussion; Spillovers; Exchange rates; Exchange rate policy; Financial sector; Financial stability assessment; Global
Cover IMF Working Papers
The Effects of the Global Crisison Islamic and Conventional Banks: A Comparative Study
Mr. Jemma Dridi
and
Maher Hasan
This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by looking at the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market share. Our analysis suggests that IBs have been affected differently than CBs. Factors related to IBs‘ business model helped limit the adverse impact on profitability in 2008, while weaknesses in risk management practices in some IBs led to a larger decline in profitability in 2009 compared to CBs. IBs‘ credit and asset growth performed better than did that of CBs in 2008-09, contributing to financial and economic stability. External rating agencies‘ re-assessment of IBs‘ risk was generally more favorable.
Keywords:
WP; credit growth; market share; asset growth; investment portfolio; IB dummy; toxic asset; Islamic banks; conventional banks; financial stability; financial crisis; mean test; regression analysis; bank dummy; Islamic banks assets; Islamic banking; Islamic finance; Credit; Commercial banks; Global