The paper introduces a causal mediation framework to separate direct discrimination from structural inequality in AI-driven credit decisions. Using Pearl’s natural direct and indirect effects, it presents an identification strategy under treatment‑induced confounding and proposes a doubly‑robust estimator with efficiency guarantees. Empirical analysis of 89,465 mortgage applications shows that about 77% of racial denial disparities stem from financial mediators, while the remaining 23% represents a conservative lower bound on direct discrimination.
By Duraimurugan Rajamanickam
arXiv:2607. 05101v1 Announce Type: new Abstract: The application of machine learning-based predictive algorithms to Anti-Money Laundering (AML) has grown rapidly, driven by the vast volume of financial transaction data available to banks.
By Lea Multerer, Michele Inchingolo, David Kletz, Adrian Cosma, Alessandro Antonucci, Martina Gogova
The study investigates whether Large Language Models (LLMs) can translate technical explanations from credit risk models into stakeholder-friendly narratives. Using Freddie Mac loan data, the authors compare standard tabular models (XGBoost + SHAP) with alternative data pipelines (GNN + GNNExplainer and a bimodal mix) and generate explanations with three LLM configurations: a small fine‑tuned Gemma 3 4B, a large fine‑tuned DeepSeek R1 70B, and a zero‑shot Gemini 2.5. Findings show that the quality of explanations is more dependent on the evidence representation than on the LLM, that narratives reliably identify influential factors but are less consistent about the direction of influence, and that credit professionals demand higher evidentiary standards than non‑professionals.
By Sahab Zandi, Noah Kostesku, Christophe Mues, Mar\'ia \'Oskarsd\'ottir, Cristi\'an Bravo
arXiv:2607. 21806v1 Announce Type: new Abstract: Predictive machine learning (ML) models are increasingly used to aid human decision-makers across various high-risk domains such as healthcare and criminal justice.
By Jonathan Zhang, Erik Skalnes, Jacob Chen, Michael Oberst
The paper introduces REMI, a framework that treats counterfactual fairness as a relational invariant discovery problem. By learning over paired examples, REMI identifies input regions where fairness is violated and generates interpretable rule-based models—fairness invariants—that can block or relabel unfair predictions without retraining the underlying model. Experiments on symbolic and neural network programs show REMI localizes fairness bugs in over 83% of cases and reduces discriminatory decisions in black-box models by up to 70%.
By Ranit Debnath Akash, Ashish Kumar, Gang Tan, Saeid Tizpaz-Niari
arXiv:2608. 00566v1 Announce Type: new Abstract: Post-hoc model explainers such as LIME, SHAP, and Integrated Gradients are widely deployed to audit models in high-stakes sensitive domains, including finance, healthcare, and social welfare.
By Niraj Kumar, Harsh Kasyap