Swift and unexpected shifts of financial regulations can have profound implications for the general population. This is evidenced by China’s abrupt transition in its stance on P2P lending in 2018. Initially embracing these platforms, the abrupt regulatory pivot to widespread shutdowns. Our empirical research, drawing upon credit application data, demonstrates how this indiscriminate approach hindered economic development opportunities for a significant portion of borrowers, particularly the underprivileged. As a remedy, we advocate for the implementation of AI-driven regulatory frameworks. Rather than a monolithic approach to all borrowers, AI helps distinguish between real financial risks and those that can be managed. This nuanced strategy safeguards individuals’ economic progression, while efficiently mitigating financial hazards. For policymakers and industry stakeholders, our findings underscore the importance of contemplating the broader ramifications of regulatory decisions and harnessing innovative methodologies, such as AI, to strike an optimal balance.

Natural disasters can have devastating economic and financial consequences for those affected. This research note explores the potential of artificial intelligence (AI) in disaster relief through lending services. By collaborating with a credit-scoring company, we investigate how AI-empowered lenders can effectively reduce delinquency rates for borrowers in the aftermath of disasters. Our findings reveal that borrowers applying to lenders that utilize AI in their loan assessment process experience improved outcomes in terms of delinquency reduction, particularly for borrowers with lower credit scores. This research underscores the positive impact of AI in the lending context, benefiting both lenders and borrowers. Furthermore, we highlight that AI indirectly supports disaster relief efforts through financing, providing a compelling use case for AI fairness in lending. Our findings have significant implications for leveraging AI as a valuable tool in mitigating the financial impact of disasters and promoting fairness in lending practices.