Accept or Deny? Evaluating LLM Fairness and Performance in Loan Approval across Table-to-Text Serialization Approaches

Large Language Models (LLMs) are increasingly employed in high-stakes decision-making tasks, such as loan approvals. While their applications expand across domains, LLMs struggle to process tabular data, ensuring fairness and delivering reliable predictions. In this work, we assess the performance and fairness of LLMs on serialized loan approval datasets from three geographically distinct regions: Ghana, Germany, and the United States. Our evaluation focuses on the model's zero-shot and in-context learning (ICL) capabilities. Our results reveal that the choice of serialization (Serialization refers to the process of converting tabular data into text formats suitable for processing by LLMs.) format significantly affects both performance and fairness in LLMs, with certain formats such as GReat and LIFT yielding higher F1 scores but exacerbating fairness disparities. Notably, while ICL improved model performance by 4.9-59.6% relative to zero-shot baselines, its effect on fairness varied considerably across datasets. Our work underscores the importance of effective tabular data representation methods and fairness-aware models to improve the reliability of LLMs in financial decision-making.

A Causal Framework to Measure and Mitigate Non-binary Treatment Discrimination

Fairness studies of algorithmic decision-making systems often simplify complex decision processes, such as bail or loan approvals, into binary classification tasks. However, these approaches overlook that such decisions are not inherently binary (e.g., approve or not approve bail or loan); they also involve non-binary treatment decisions (e.g., bail conditions or loan terms) that can influence the downstream outcomes (e.g., loan repayment or reoffending). In this paper, we argue that non-binary treatment decisions are integral to the decision process and controlled by decision-makers and, therefore, should be central to fairness analyses in algorithmic decision-making. We propose a causal framework that extends fairness analyses and explicitly distinguishes between decision-subjects' covariates and the treatment decisions. This specification allows decision-makers to use our framework to (i) measure treatment disparity and its downstream effects in historical data and, using counterfactual reasoning, (ii) mitigate the impact of past unfair treatment decisions when automating decision-making. We use our framework to empirically analyze four widely used loan approval datasets to reveal potential disparity in non-binary treatment decisions and their discriminatory impact on outcomes, highlighting the need to incorporate treatment decisions in fairness assessments. Moreover, by intervening in treatment decisions, we show that our framework effectively mitigates treatment discrimination from historical data to ensure fair risk score estimation and (non-binary) decision-making processes that benefit all stakeholders.