Ever since the arrival of the AI boom, this technology has been revolutionizing industries by enabling both sophisticated decision-making systems at scale and remarkably accurate forecasting. But does it safeguard companies from possible discriminatory and legal abuse? Does AI accuracy integrate the challenges of transparency and fairness? Does it build trust? These are some of the questions we have been exploring for the past four years by monitoring banks and companies and their use of AI in daily business transactions. Our conclusions feed into both HEC’s teaching and partner companies’ practices. Key findings & research contributions:Development of statistical tools to assess fairness, interpretability, frugality, and stability in AI models.Methodologies to identify biases and their causes, and improve fairness without compromising predictive power.Alignment with legal frameworks like the Equal Credit Opportunity Act (ECOA) in the US and the AI Act in Europe.
By Christophe Pérignon
The big data revolution - the integration of vast amounts of data through Artificial Intelligence - has far-reaching economic implications, particularly for the financial industry and jobs in this industry. Why? And could AI potentially trigger the next financial crisis, as recently suggested by Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC)? HEC Paris Professor of Finance Thierry Foucault explored how data and algorithms are transforming investment decision-making and trading behavior in financial markets in a November Reskill masterclass. He also tackled the associated risks, and the implications for jobs in the financial industry. Extracts.
By Thierry Foucault
At the end of this year, marked by crucial elections in France and around the world, I would like to draw on recent research to shed light on the overlooked links between finance and politics. It has become a widely accepted idea that rising political polarization causes people with differing affiliations to view the world through distinct lenses and even to believe in different facts. Recent research shows that the financial industry is not immune to partisan biases; finance professionals, too, carry their political identities into their work. Let me take you on a tour of this research!
Online reputation matters in the food industry. With every star earned on Tripadvisor, for example, a popular eatery can attract more customers, bolster revenue and expand its business. What’s more, new research by HEC Professor of finance François Derrien and co-authors Alexandre Garel (Audencia Business School), Arthur Romec (TBS Business School) and Jean-Philippe Weisskopf (EHL Hospitality Business School) have confirmed there is a causal link between a restaurant’s ratings and its ability to service additional debt, making it easier for lenders today to identify successful restaurants and drive their growth.
By François Derrien
In this interview, Karen Degouve (H.94) explains her pivotal role in coordinating sustainable finance efforts within French banking groups, which face challenges in developing profitable yet planet-conscious businesses. Degouve offers valuable guidance for graduates entering the business world and investors seeking to align their financial decisions with sustainability goals. She also took the time to share her opinion on research findings on ESG and impact investment conducted by the HEC Paris faculty.
This special edition of the Knowledge@HEC review focuses on the Earth’s planetary boundaries. The issue highlights HEC Paris' approach toward organizational, environmental, and societal challenges linked to the nine planetary boundaries within which humanity can develop for generations to come. The review showcases research and initiatives aimed at informing and empowering businesses, policymakers, and future leaders. We highlight the multidisciplinary approaches in the school's research, teaching, and action, inviting HEC Paris students, graduates, professors, entrepreneurs, and donors to share their visions of a more sustainable future. "Aligning Business with Planetary Boundaries" will be officially launched at the HEC Climate Day on May 22. Meanwhile, you can find the pdf here.
HEC Paris undergoes a transformative shift in its curriculum. Building on its legacy of sustainability initiatives, the institution now prioritizes planetary boundaries and societal impact. The updated curriculum emphasizes sustainability integration and student empowerment for real-world impact. This reflects HEC's dedication to nurturing leaders prepared to address modern challenges.
If companies anticipate that the government might impose caps on carbon emissions, they will likely invest in green technologies. This, in turn, drives down the cost of achieving reductions for all. That’s according to HEC Paris finance professors Augustin Landier and Bruno Biais. In “Emission Caps and Investment in Green Technologies,” the co-authors also show that if these firms don’t think carbon restrictions are coming, they won’t invest, and the government eventually will find it too costly to the economy to impose caps. In other words, companies’ expectations about future government action play a crucial role in reducing the carbon emissions driving rapid climate change. So, ask the researchers, how can a balance be found? 4 key findings: Anticipating future regulations spurs green technology investments, lowering emission reduction costs; Early investments in green technologies create a self-fulfilling prophecy, facilitating feasible emissions caps; Private and public actions synergize for desired outcomes through a complementary equilibrium; One large investor can have a significant influence.
By Bruno Biais , Augustin Landier
For a long time, addressing sustainability problems has been regarded as a technological challenge. Today, supporting the transition to a more sustainable world has transcended this technological status and emerged as a quintessential management, economic, and behavioral challenge. Within this realm, research in social sciences and management assumes a pivotal role, offering insights across various crucial dimensions of the transition.
At HEC Paris, the integration of research, teaching, and action is a fundamental philosophy that we embody. In today's dynamic landscape, where environmental and social challenges are increasingly prominent, HEC serves as a beacon of innovation and responsibility. As Europe's leading business school, we acknowledge our responsibility to guide future leaders in navigating the complexities of a world in flux.
