Researchers at UCL and Queen Mary University of London have developed an algorithm that assesses whether a bailout is the best strategy for the public purse, according to a UCL release.
The government may soon be able to predict whether bank bailouts will ultimately save taxpayers money, using an artificial intelligence tool developed at two London universities.
Researchers at UCL and Queen Mary University of London have developed an algorithm that assesses whether a bailout is the best strategy for the public purse, according to a release from UCL on Thursday. It also suggests which firm to save as well as how much money to spend.
The authors tested the AI tool described in a new peer-reviewed paper in Nature Communications using data from the European Banking Authority on a network of 35 European financial institutions.
It will help officials “especially to assess the financial consequences – whether that means checking whether a bailout is in the best interest of taxpayers or whether letting a bank fail is good value for money,” said Neophytos Rodosthenas, one of the paper’s authors. In publication. “Our techniques are freely available for banking executives to use as tools in their decision-making processes.”
Various financial institutions were nationalized during the 2008 crisis, with taxpayers paying billions of pounds to support institutions such as the Royal Bank of Scotland, now called NatWest Group plc. As the UK is still the largest shareholder in NatWest, these arrangements are still being closed.