Artificial intelligence is reshaping how European banks evaluate business risks and distribute loans, according to a new study by the European Central Bank (ECB) published in October 2026. The research, conducted by Bruno Buchetti, Christian Eufinger, Luca X. Lin, and Ixart Miquel-Flores, analyzed 6.8 million firm-bank-quarter observations from private companies in Germany, France, Italy, and Spain between 2021 and 2024. The study found that AI is making banks more optimistic about certain industries, particularly those with high exposure to AI, such as computer programming, information services, and scientific research.
The findings reveal that a one-standard-deviation increase in public attention to AI was linked to a 5% reduction in assessed default risk for companies in AI-exposed sectors. However, labour-intensive businesses saw a smaller reduction, highlighting the need for workforce training and digital skills development to mitigate potential economic disparities. The study also suggests that AI could level the playing field for smaller businesses, reducing the competitive advantages of market leaders.
In highly AI-exposed markets, market leaders faced an 8% higher assessed default risk compared to smaller competitors, with top 10% companies seeing a nearly 10% increase. This shift was accompanied by changes in financing, with market leaders experiencing a 3.8% reduction in drawn credit and a 1.2 percentage point increase in the probability of losing an existing banking relationship. Banks with strong industry knowledge were found to be more optimistic about AI-exposed borrowers, assigning default-risk estimates 11% to 16% lower than non-specialist lenders.
The researchers caution that the study measures banks' expectations rather than proven financial performance improvements. They recommend that governments and development partners prioritize affordable digital infrastructure, workforce retraining, and stronger financial supervision to ensure that AI-driven transformations support inclusive economic growth and financial stability.