Abstract

This paper investigates the adoption of Artificial Intelligence (AI) technologies in financial risk forecasting within microfinance institutions (MFIs) in Nigeria. With microfinance playing a pivotal role in providing financial services to underserved populations, AI adoption in risk management has the potential to improve the accuracy of financial decision-making. This study employs a quantitative approach, surveying 50 MFIs to understand the factors influencing AI adoption and its perceived usefulness. The research found that perceived usefulness and ease of use are significant predictors of AI adoption, with larger MFIs showing a higher level of AI integration compared to smaller ones. The findings suggest that AI can enhance financial stability in MFIs by providing better risk forecasting tools, especially for institutions facing challenges such as limited data and financial resources. The study highlights the need for capacity-building initiatives and policy interventions to support AI adoption in smaller MFIs. This research contributes to the growing body of knowledge on AI in financial services and provides insights for policymakers, financial practitioners, and technology providers aiming to improve the sustainability of MFIs through technological innovations.