Beyond arbitrage: machine learning for financing impactful economic activity

2025

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DOI 10.1007/s43681-025-00697-6
Data confidence 70 medium
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Abstract

Institutional investors are looking for opportunities that will have a positive social and environmental impact as well as positive returns. Compared to the largely speculative trading in equity markets and financial markets, this is a significant change. Investing with impact requires a long-term perspective. Impact investments are becoming increasingly popular as governments expect institutional investors to contribute to the achievement of UN sustainable development goals by 2030. Several characteristics are included in these goals, including environmental sustainability, social inclusion, integration, competitiveness, and resilience. In this paper, new AI methods are presented that utilize network theory, complex fitness dynamics of networks, and machine learning techniques for sourcing investments more effectively and forecasting their likely impact more accurately. The paper discusses ethical considerations and safeguards that should be observed when deploying artificial intelligence for impact investment.