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Fields Changed

Registration

Field Before After
Trial Status in_development completed
Last Published February 07, 2016 05:53 PM July 05, 2023 12:42 PM
Study Withdrawn No
Intervention Completion Date March 31, 2016
Data Collection Complete Yes
Final Sample Size: Number of Clusters (Unit of Randomization) 27447 cases
Was attrition correlated with treatment status? No
Final Sample Size: Total Number of Observations Experiment 1: 24,950 cases Experiment 2: 2,497 cases
Data Collection Completion Date April 03, 2016
Keyword(s) Finance Finance
Building on Existing Work No
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Papers

Field Before After
Paper Abstract This study aims to explore how various nudges that have successfully increased the payment discipline among borrowers with performing loans affect the behavior of the defaulted debtors. In three field experiments involving 32,000 borrowers, debtors were randomly assigned to receive reminders that used personalized language, mentioned economic consequences, and prosocial motives. In one experiment, the design of the envelope varied. The experimental results show that simply nudging defaulted individuals does not work. Although every next reminder that debtors receive increases the payment rate, the effect is rather small. Moreover, sending reminders when the promise to make a payment on a debt has already been made can trigger a repeated default. I also find that a red envelope design backfires on collection efforts. The findings offer a fuller understanding of the behavior of defaulted debtors and suggest policy implications in debt repayment and recovery of non-performing loans.
Paper Citation Saulı̄tis, A. (2023). Nudging debtors with non-performing loans: Evidence from three field experiments. Journal of Behavioral and Experimental Finance, 37, 100776. https://doi.org/10.1016/j.jbef.2022.100776
Paper URL https://doi.org/10.1016/j.jbef.2022.100776
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