The Influence of Explainability on Stakeholder Trust in AI-Based Credit Risk Assessment Tools

As artificial intelligence (AI) systems become central in financial decision-making, particularly in credit risk assessment, ensuring stakeholder trust is paramount. This study investigates the role of explainability in enhancing trust among key stakeholders-loan officers, borrowers, and regulatory personnel-in AI-driven credit scoring tools. Through a mixed-methods approach involving experimental simulation, stakeholder interviews, and quantitative modeling, we demonstrate that explainable AI (XAI) significantly improves perceptions of fairness, accountability, and transparency. Our results reveal that local interpretability techniques, such as SHAP and LIME, positively influence trust levels across stakeholder categories, particularly when combined with model performance metrics. The study also presents a trust quantification model and offers a novel framework integrating explainability with regulatory compliance standards. These findings underscore the necessity of embedding explainability mechanisms into credit risk AI systems to foster trust, ensure responsible deployment, and satisfy regulatory expectations