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:2402. 01811v2 Announce Type: replace Abstract: Credit scoring has been catalogued by the European Commission and the Executive Office of the US President as a high-risk classification task, in light of the potential harms of making loan approval decisions based on models that would be biased against certain groups.
By Pablo Casas, Huan Yu, Christophe Mues
The paper argues that traditional probabilistic fairness metrics can miss significant disparities in the actual consequences of decisions. By introducing a utility-based framework, the authors show that a process can satisfy ε-fairness yet still be maximally unfair when utilities are considered. They apply this framework to college admissions and credit‑risk assessment, demonstrating that equalizing probabilities alone may mask unequal utility outcomes across groups.
By Tolulope Fadina, Thorsten Schmidt
Credit risk models increasingly need to combine predictive accuracy with transparent explanations and auditable fairness constraints. Logistic regression remains attractive because its coefficients ar...
arXiv:2609.39025v1 Announce Type: cross
Abstract: Fairness assessment in algorithmic decisions that affect individuals, such as credit scoring, often relies on parity measures calculated at the aggre...
By Dalia Atif, Paolo Giudici
arXiv:2507. 22758v2 Announce Type: replace-cross Abstract: Recent advancements in financial problem-solving have leveraged LLMs and agent-based systems, with a primary focus on trading and financial modeling.
By Gautam Jajoo, Atharva Pandey, Pranjal A Chitale, Saksham Agarwal