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2025-06-05 09:37:52

This https://arxiv.org/abs/2505.13469 has been replaced.
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Algorithmic Tradeoffs in Fair Lending: Profitability, Compliance, and Long-Term Impact
As financial institutions increasingly rely on machine learning models to automate lending decisions, concerns about algorithmic fairness have risen. This paper explores the tradeoff between enforcing fairness constraints (such as demographic parity or equal opportunity) and maximizing lender profitability. Through simulations on synthetic data that reflects real-world lending patterns, we quantify how different fairness interventions impact profit margins and default rates. Our results demonst…