The impact of new product introduction on attitudes towards finance

Last registered on October 31, 2022
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Pre-Trial

Trial Information

General Information

Title
The impact of new product introduction on attitudes towards finance
RCT ID
AEARCTR-0010032
Initial registration date
October 25, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
October 31, 2022, 3:54 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Mikael Paaso
Affiliation
Erasmus University
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Other Primary Investigator(s)

PI Name
Deniz Okat
PI Affiliation
Hong Kong University of Science and Technology
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PI Name
Vesa Pursiainen
PI Affiliation
University of St. Gallen
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PI Name
George Mugabe
PI Affiliation
Kepler
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Additional Trial Information

Status
In development
Start date
2022-10-28
End date
2023-12-01
Keywords
Finance & Microfinance
Additional Keywords
mobile money, mobile banking
JEL code(s)
D14, G41, G51
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In this project, we study the impact of being introduced to mobile banking on attitudes towards other financial services. Our hypothesis is that being introduced to a new financial product can act as a "gateway" that lowers barriers (such as a lack of trust) that have previously slowed adoption of formal financial products. We therefore conduct an RCT in which people are randomly assigned to receive a cash grant, a transfer to a mobile banking account (which they will have to create) or a transfer to a mobile banking account and incentives to save using the account. We then survey these people regularly to track their attitudes towards and use of other financial products, such as loans, formal non-mobile banking and informal savings groups.

Our hypothesis, based on pre-interviews with target groups, is that active usage of mobile banking would encourage using of other formal financial products. While everyone in our sample has a physical bank account by design, these tend to be perceived as having limited utility other than a secure store of money and way to pay tuition fees. Being encouraged to use a low-cost and convenient bank account (that pays interest) which also enables easier access to borrowing could plausibly affect attitudes towards use of these products.

The prior literature has documented that being exposed to a new financial product changes people's attitudes towards that product. For instance, Bachas et al (2021) find that being introduced to debit cards leads to higher trust in the bank that issued the card and Mehrotra, Somville and Vandevalle (2021) find that repeat interactions with a banker increase trust in the banker and other bankers. There is also some evidence that being introduced to a simple bank account (and a financial literacy training program) can increase trust in banks (Horn et al. 2021) and that being introduced to a new fintech product increases stock market participation (Hong, Lu and Pan, 2021). However, Herrerias and Alvarez (2022) do not find any association between having financial product (introduced by a third party) and financial behavior.

Note: Earlier versions of this proposal involved introducing people to mobile money instead of mobile banking. After pre-interviews, we concluded that the government of Rwanda's efforts to promote mobile money during the COVID-19 pandemic and associated lockdowns had lifted usage rates among our sample so high that we would be unable to shift attitudes towards them. However, mobile money is still (based on our pre-interviews) seen as a mainly transactional device / short-term medium for holding cash. We hope that introducing a bank account that pays interest and unlocks access to loans will be perceived as sufficiently different.
External Link(s)

Registration Citation

Citation
Mugabe, George et al. 2022. "The impact of new product introduction on attitudes towards finance." AEA RCT Registry. October 31. https://doi.org/10.1257/rct.10032-1.0
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Experimental Details

Interventions

Intervention(s)
We will give cash grants to all subjects, with some people receiving the grant in cash and others in the form of a transfer to a mobile bank account. The mobile banking arm will further be randomized into an "incentivized usage" arm in which participants are offered cash incentives to provide evidence of saving in the bank account.
Intervention Start Date
2022-10-28
Intervention End Date
2023-06-01

Primary Outcomes

Primary Outcomes (end points)
- Preferred way to save
- Attitude towards borrowing
- Perceived convenience and cost of, and trust in, various financial products (informal savings groups, traditional bank account, mobile money)
Primary Outcomes (explanation)
The variables will all be collected using surveys.
Preferred way to save will be collected with a question asking how the participant would save money to fund a large expense in the future (multiple choice)
Attitude towards borrowing is measured with a question asking "How comfortable are you with taking on debt" (on a set scale)
Perceived convenience, cost and trust are measured using subjective scale questions

Secondary Outcomes

Secondary Outcomes (end points)
(Change in) Usage of formal financial products (savings account, mobile money, micro-insurance)
Risk preferences
Trust in other people
Attitude towards sharing financial resources
Secondary Outcomes (explanation)
The data will all be collected using surveys. Risk preferences will be measured using self-reported subjective scale. Trust in people will be a subjective self-reported attitude. Attitudes towards sharing of financial resources will be measured using subjective questions asking people whether they would be expected to share their earnings with others in the community / family.

Experimental Design

Experimental Design
We will randomize subjects into three treatment arms.
Experimental Design Details
Not available
Randomization Method
Cluster randomization, pre-assigned by computer. Randomization will not be true randomization in the sense that we will intervene (before even seeing the subjects and before collecting any data) if any treatment arm has significantly more participants than expected.
Randomization Unit
Cluster randomization into experimental sessions level. We are conducting the experiment on two separate sites but will randomize within each site.
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
12 experimental sessions (6 on each campus). Experimental sessions are not equally sized.
Sample size: planned number of observations
C. 700 (target - depends on success in recruitment)
Sample size (or number of clusters) by treatment arms
c. 233 subjects (4 clusters) receive cash, 233 subjects receive mobile bank accounts without incentive to save, 233 subjects receive mobile bank + incentive to save
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Hong Kong University of Science and Technology IRB
IRB Approval Date
2022-06-24
IRB Approval Number
535
Analysis Plan