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Explaining AI in Finance: Past, Present, Prospects

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arxiv 2306.02773 v1 pith:P7Z53RLM submitted 2023-06-05 q-fin.ST q-fin.GN

classification q-fin.STq-fin.GN
keywords financefinancialmethodsroleapplicationscomparedcomplexcrucial
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This paper explores the journey of AI in finance, with a particular focus on the crucial role and potential of Explainable AI (XAI). We trace AI's evolution from early statistical methods to sophisticated machine learning, highlighting XAI's role in popular financial applications. The paper underscores the superior interpretability of methods like Shapley values compared to traditional linear regression in complex financial scenarios. It emphasizes the necessity of further XAI research, given forthcoming EU regulations. The paper demonstrates, through simulations, that XAI enhances trust in AI systems, fostering more responsible decision-making within finance.

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Reviewed papers in the Pith corpus that reference this work. Sorted by Pith novelty score. Full citation record

  1. Painting the market: generative diffusion models for financial limit order book simulation and forecasting

    q-fin.TR 2025-09 conditional novelty 6.0 of 10

    An image-based diffusion with inpainting generates limit order book futures and achieves state-of-the-art distributional similarity on GOOG within LOB-Bench.

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