Artificial Intelligence and Financial Development in 2021

Artificial Intelligence and Financial Development:

Beijing’s proposal to establish an RMB exchange in Macau has sparked heated discussions in Macau and the GHM (Guangdong-Hong Kong-Macau) Great Bay Area on the future direction of Macau’s financial development.

Additionally, discussions are underway about the need to diversify Macau’s gaming economy through organic launches of innovative industries and technologies such as artificial intelligence (AI) and large-scale data analytics in the city. In this article, I argue that these two segments are not really synergistic. The link is the promising ability of AI analytics to improve the underlying information infrastructure needed for a modern, functioning financial market.

A modern and dynamic financial market relies on an underlying functional information infrastructure that allows investors and other interested parties to make informed and effective investment decisions. In particular, the underlying information infrastructure must be able to:

(1) process all relevant business data available over a period of time (raw information) and translate it into descriptive information readily available for further analysis (related to “what is it?” “question)

(2) transform descriptive information through further analysis into predictive or practical information or knowledge for a company, industry, and market in general (answer the question” what intelligence/knowledge is likely to be predictable? “can be subject to even more prescriptive analyzes tailored to individual investors or stakeholders to facilitate individual decision-making (in relation to the question “what should I do now?”).

The nature of the data relevant to the firm (raw information) is such that the data is always in a multimodal form, including the traditional numerical mode (actual income, profit forecasts, periodic debts, etc.), to revenues, explanations, forecasts, analysis by the company concerned, media and information brokers or online forums, etc.) and audio and video modes (audio or video recordings of media interviews, public speeches, members of senior management, meetings, vlogs of individuals and representatives or affiliates of various organizations, etc.). In particular, non-numerical data (text, audio, video) are commonly known as unstructured data, also because they are not easily indexable for comparisons between companies and over time.

With the advent of the Internet and wireless technology, the amount of unstructured, non-numerical raw information currently available to the public has increased rapidly. It goes without saying that the cost of processing, collecting, and translating this growing amount of relevant but unstructured raw data into descriptive information at some point and then converting it into practical information/knowledge cannot be trivial and troubling.

The encouraging news is that recent advances in AI analytics promise to reduce the costs of processing and transforming relevant data, especially unstructured big data, in non-numerical ways. In particular, the data can be quantified or indexed in non-numerical ways (text, audio, video), together with the more traditional numerical data for intercompany and/or temporal comparative analysis. Artificial intelligence methods of natural language processing (NLP), machine learning (ML), and deep learning (DL) are maturing and, if supported by the power of modern computers, can become effective.

With these methods and judicious use, we are able to process and analyze a large amount of multimodal and unstructured financial data at any time with reasonable ease and speed and at a moderate and decreasing cost. Combining variously relevant and unstructured big data into a cohesive whole to increase the overall information capacity of available data has become a popular academic research topic in accounting, finance, and IT. You can now provide real-time or near real-time forecast analysis based on the latest data available in a company, industry, or market.

The rationale behind the development of a financial market is the development of innovative industries in Macau. A functional financial market

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