Causal Inference for Banking Finance and Insurance A Survey

ArXiv ID: 2307.16427 “View on arXiv”

Authors: Unknown

Abstract

Causal Inference plays an significant role in explaining the decisions taken by statistical models and artificial intelligence models. Of late, this field started attracting the attention of researchers and practitioners alike. This paper presents a comprehensive survey of 37 papers published during 1992-2023 and concerning the application of causal inference to banking, finance, and insurance. The papers are categorized according to the following families of domains: (i) Banking, (ii) Finance and its subdomains such as corporate finance, governance finance including financial risk and financial policy, financial economics, and Behavioral finance, and (iii) Insurance. Further, the paper covers the primary ingredients of causal inference namely, statistical methods such as Bayesian Causal Network, Granger Causality and jargon used thereof such as counterfactuals. The review also recommends some important directions for future research. In conclusion, we observed that the application of causal inference in the banking and insurance sectors is still in its infancy, and thus more research is possible to turn it into a viable method.

Keywords: causal inference, Bayesian Causal Network, Granger Causality, counterfactuals, Banking / Finance / Insurance

Complexity vs Empirical Score

• Math Complexity: 6.0/10
• Empirical Rigor: 2.0/10
• Quadrant: Lab Rats
• Why: The paper discusses advanced mathematical concepts like the Causal Hierarchy Theorem and graphical methods (e.g., Bayesian Networks) but is a survey with no implementation, backtests, or datasets, making it theoretical rather than empirical.

  flowchart TD
    A["Research Goal<br/>Application of Causal Inference<br/>in Banking, Finance & Insurance"] --> B["Methodology<br/>Survey of 37 Papers (1992-2023)"]
    B --> C["Key Inputs<br/>Bayesian Causal Network<br/>Granger Causality<br/>Counterfactuals"]
    C --> D["Computational Process<br/>Categorization by Domain:<br/>Banking, Finance, Insurance"]
    D --> E["Key Findings & Outcomes<br/>Causal Inference in infancy<br/>Future Research Directions"]