Marketing Effects in a Consumer Credit Market in South Africa

Last registered on July 26, 2016


Trial Information

General Information

Marketing Effects in a Consumer Credit Market in South Africa
Initial registration date
July 26, 2016

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
July 26, 2016, 2:46 PM EDT

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



Primary Investigator

Northwestern University

Other Primary Investigator(s)

PI Affiliation
Princeton University
PI Affiliation
Harvard University
PI Affiliation
University of Chicago
PI Affiliation
Dartmouth College

Additional Trial Information

Start date
End date
Secondary IDs
Firms spend billions of dollars developing advertising content, yet there is
little field evidence on how much or how it affects demand. We analyze a direct
mail field experiment in South Africa implemented by a consumer lender that
randomized advertising content, loan price, and loan offer deadlines simultaneously.
We find that advertising content significantly affects demand. Although it
was difficult to predict ex ante which specific advertising features would matter
most in this context, the features that do matter have large effects. Showing fewer
example loans, not suggesting a particular use for the loan, or including a photo
of an attractive woman increases loan demand by about as much as a 25% reduction
in the interest rate. The evidence also suggests that advertising content
persuades by appealing “peripherally” to intuition rather than reason. Although
the advertising content effects point to an important role for persuasion and related
psychology, our deadline results do not support the psychological prediction
that shorter deadlines may help overcome time-management problems; instead,
demand strongly increases with longer deadlines.
External Link(s)

Registration Citation

Bertrand, Marianne et al. 2016. "Marketing Effects in a Consumer Credit Market in South Africa." AEA RCT Registry. July 26.
Former Citation
Bertrand, Marianne et al. 2016. "Marketing Effects in a Consumer Credit Market in South Africa." AEA RCT Registry. July 26.
Sponsors & Partners

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Experimental Details


Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
Did not obtain a loan

Applied for loan before mailer deadline

Obtained loan before mailer deadline

Loan amount obtained before mailer deadline

Loan in collection status

Borrowed from other lender
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design

The study was conducted in partnership with a highly profitable consumer lender in South Africa to determine the effects of advertising content, price, and offer deadlines on loan take up, and in doing so, to analyze the effects of advertising content on real decisions, involving non-negligible sums, among experienced decision makers.

The lender sent direct mail solicitations to 53,194 predominantly urban former clients offering them a new loan at randomly assigned interest rates ranging from 3.25 percent per month to 11.75 percent per month. These mailers varied in a number of ways. First, there were eight variations in advertising content- (1) a person' s photograph on the letter, (2) a suggestion of how to use the loan, (3) a table featuring either a small or large number of example loans, (4) information about interest rate and payments, (5) a comparison to competitors' rates, (6) mention of a promotional raffle, (7) a reference to the "special" or "low" rate, and (8) a mention of the lender offering services in the local language. Additional randomization included the time before the offer' s deadline, which varied from two to six weeks.

Experimental Design Details
Randomization Method
A consumer lender in South Africa sent advertising fliers to former clients, chosen at random from among those who had borrowed from the Lender within 24 months of the mailing date, but not within the previous six months
Randomization Unit
individual clients
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
No clusters
Sample size: planned number of observations
53,194 clients
Sample size (or number of clusters) by treatment arms
see data & paper, multi-arm design
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number


Post Trial Information

Study Withdrawal

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Is the intervention completed?
Intervention Completion Date
December 31, 2006, 12:00 +00:00
Data Collection Complete
Data Collection Completion Date
December 31, 2006, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
no clusters
Was attrition correlated with treatment status?
Final Sample Size: Total Number of Observations
Final Sample Size (or Number of Clusters) by Treatment Arms
Reports, Papers & Other Materials

Relevant Paper(s)

Policymakers often prescribe that microfinance institutions increase interest
rates to eliminate their reliance on subsidies. This strategy makes sense
if the poor are rate insensitive: then microlenders increase profitability (or
achieve sustainability) without reducing the poor’s access to credit. We test the
assumption of price inelastic demand using randomized trials conducted by a
consumer lender in South Africa. The demand curves are downward sloping,
and steeper for price increases relative to the lender’s standard rates. We also
find that loan size is far more responsive to changes in loan maturity than to
changes in interest rates, which is consistent with binding liquidity constraints.
Karlan, Dean, and Jonathan Zinman. 2008. "Credit Elasticities in Less-Developed Economies: Implications for Microfinance." American Economic Review 93(8):1040-68.

Reports & Other Materials