NLP & LLMs in Finance

Financial sentiment analysis is critical for valuation and investment decision-making. Traditional NLP models, however, are limited by their parameter size and the scope of their training datasets, which hampers their generalization capabilities and effectiveness in this field. Recently, Large Langu

We investigate the response of shareholders to Environmental, Social, and Governance-related reputational risk (ESG-risk), focusing exclusively on the impact of social media. Using a dataset of 114 million tweets about firms listed on the S&P100 index between 2016 and 2022, we extract conversations

In this study, we predict next-day movements of stock end-of-day implied volatility using random forests. Through an ablation study, we examine the usefulness of different sources of predictors and expose the value of attention and sentiment features extracted from Twitter. We study the approach on

High-stakes tabular pipelines rely on scattered, static quality checks that are hard to evolve and audit against policy intent. Regulated domains particularly suffer as the LLM-era automation raises expectations for traceability and accountability. We propose a vision for an ontology-grounded, repos

Background: Credit risk modelling is fundamental in financial institutions, typically using credit history, repayment behaviour, income, and outstanding debt to estimate a borrower’s probability of default. Although transactional data are sometimes incorporated through aggregated measures such as re

We study whether generative AI can automate feature discovery in U.S. equities. Using large language models with retrieval-augmented generation and structured/programmatic prompting, we synthesize economically motivated features from analyst, options, and price-volume data. These features are then u

In quantitative investing, return prediction supports various tasks, including stock selection, portfolio optimization, and risk management. Quantitative factors, such as valuation, quality, and growth, capture various characteristics of stocks. Unstructured data, like news and transcripts, has attr

From viral jokes to a billion-dollar phenomenon, meme coins have become one of the most popular segments in cryptocurrency markets. Unlike utility-focused crypto assets like Bitcoin, meme coins derive value primarily from community sentiment, making them vulnerable to manipulation. This study presen

Recently, large language models (LLMs) with hundreds of billions of parameters have demonstrated the emergent ability, surpassing traditional methods in various domains even without fine-tuning over domain-specific data. However, when it comes to financial sentiment analysis (FSA)$\unicode{“x2013”}$

Extracting specific items from 10-K reports is challenging due to variations in document formats and item presentation. To improve over traditional rule-based approaches, this study introduces and compares two advanced item segmentation methods: (1) GPT4ItemSeg, using a novel line-ID-based prompting

Large language models (LLMs) promise to democratize financial analysis by reducing information-processing costs. Yet equal access does not ensure equal outcomes, as the locus of friction may shift from processing information to evaluating model outputs. We study GPT’s earnings forecasts following co

Investment Analysis is a cornerstone of the Financial Services industry. The rapid integration of advanced machine learning techniques, particularly Large Language Models (LLMs), offers opportunities to enhance the equity rating process. This paper explores the application of LLMs to generate multi-

Although powerful, current cutting-edge LLMs may not fulfil the needs of highly specialised sectors. We introduce KodeXv0.1, a family of large language models that outclass GPT-4 in financial question answering. We utilise the base variants of Llama 3.1 8B and 70B and adapt them to the financial dom

It is widely acknowledged that extracting market sentiments from news data benefits market predictions. However, existing methods of using financial sentiments remain simplistic, relying on equal-weight and static aggregation to manage sentiments from multiple news items. This leads to a critical is

In this paper, we demonstrate that non-generative, small-sized models such as FinBERT and FinDRoBERTa, when fine-tuned, can outperform GPT-3.5 and GPT-4 models in zero-shot learning settings in sentiment analysis for financial news. These fine-tuned models show comparable results to GPT-3.5 when it

In traditional quantitative trading practice, navigating the complicated and dynamic financial market presents a persistent challenge. Fully capturing various market variables, including long-term information, as well as essential signals that may lead to profit remains a difficult task for learning

In this paper, we investigate the influence of claims in analyst reports and earnings calls on financial market returns, considering them as significant quarterly events for publicly traded companies. To facilitate a comprehensive analysis, we construct a new financial dataset for the claim detectio

The remarkable achievements and rapid advancements of Large Language Models (LLMs) such as ChatGPT and GPT-4 have showcased their immense potential in quantitative investment. Traders can effectively leverage these LLMs to analyze financial news and predict stock returns accurately. However, integra

Financial risk prediction plays a crucial role in the financial sector. Machine learning methods have been widely applied for automatically detecting potential risks and thus saving the cost of labor. However, the development in this field is lagging behind in recent years by the following two facts

Traditional banks face increasing competition from FinTechs in the rapidly evolving financial ecosystem. Raising operational efficiency is vital to address this challenge. Our study aims to improve the efficiency of document-intensive business processes in banking. To that end, we first review the l