Subjective Expectations and Financial Intermediation

Last registered on May 29, 2024
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Pre-Trial

Trial Information

General Information

Title
Subjective Expectations and Financial Intermediation
RCT ID
AEARCTR-0013662
Initial registration date
May 21, 2024

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
May 29, 2024, 10:20 AM EDT

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

Locations

Country
China
Region

Primary Investigator

Name
Francesco D'Acunto
Affiliation
Georgetown University
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Other Primary Investigator(s)

PI Name
Janet Gao
PI Affiliation
Georgetown University
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PI Name
Lu Liu
PI Affiliation
Tsinghua University
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PI Name
Kai Lu
PI Affiliation
University of Science and Technology of China
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PI Name
Jun Yang
PI Affiliation
Indiana University
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PI Name
Zhengwei Wang
PI Affiliation
Tsinghua University
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Additional Trial Information

Status
In development
Start date
2024-05-21
End date
2025-05-31
Keywords
Behavior, Finance & Microfinance
Additional Keywords
Banking, Expectations, Surveys, Information Treatments, RCT
JEL code(s)
D91, G21, G41
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We study the role of subjective macroeconomic expectations in guiding financial intermediation choices and specifically how loan officers' subjective expectations about future interest rates, inflation, and economic growth shape their loan granting decisions above and beyond individual and macroeconomic observables. Whereas the subjective expectations and choices of firms' managers and households have been studied extensively over the last decade, the lack of viable data for large and representative samples of loan officers has hindered researchers from studying the question we propose. We tackle this issue by accessing loan officers from various Chinese banks who source borrowers from the same online financial intermediation platform. We administer surveys that include an information treatment component to elicit loan officers' macroeconomic expectations, obtain exogenous variation in their expectations updates, and estimate the causal effects of expectations updates on credit allocation decisions at both the extensive margin (loan approval/rejection) and the intensive margin (most likely interest rate assigned to loans, conditional on acceptance).
External Link(s)

Registration Citation

Citation
D'Acunto, Francesco et al. 2024. "Subjective Expectations and Financial Intermediation." AEA RCT Registry. May 29. https://doi.org/10.1257/rct.13662-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
The study consists of repeated survey waves. The subject pool comprises loan officers that operate on an online marketplace lending platform in the People’s Republic of China. These loan officers are professionals who are registered with the platform and licensed to make loan decisions on the platform on behalf of the financial institutions that employ them.

Subject will be invited to participate in the study by the administrators of the online platform, who routinely interact with the subjects regarding all issues related to the platform working and setup. Subjects will receive an email from the platform that includes the study description and contact information before being asked whether they consent to participate in the study. The information page includes clear statements about the fact that whether the loan officer decides to participate or not in the survey will have no implications whatsoever for their activities or their employers.


The subjects who consent to participate will face an online survey that includes four components: (1) Pre-intervention Phase; (2) Information Provision Stage; (3) Post-information provision stage; and (4) Loan Decisions.
Intervention (Hidden)
The study consists of repeated survey waves. The subject pool comprises loan officers that operate on an online marketplace lending platform in the People’s Republic of China. These loan officers are professionals who are registered with the platform and licensed to make loan decisions on the platform on behalf of the financial institutions that employ them.

Subject will be invited to participate in the study by the administrators of the online platform, who routinely interact with the subjects regarding all issues related to the platform working and setup. Subjects will receive an email from the platform that includes the study description and contact information before being asked whether they consent to participate in the study. The information page includes clear statements about the fact that whether the loan officer decides to participate or not in the survey will have no implications whatsoever for their activities or their employers.

The subjects who consent to participate will face an online survey that includes four components:

1. Pre-information provision elicitation of subjective macroeconomic expectations. In this phase, subjects are asked questions about their opinions regarding the future values of interest rates, inflation rates, and GDP growth.

2. Information provision stage. In this phase, subjects will be randomly assigned to an experimental arm based on which they will receive a piece of information about professional forecasts or forecasts by policy institutions about future macroeconomic variables. The design includes a control group of subjects who will be randomly receive no information.

3. Post-information provision elicitation of subjective macroeconomic expectations. In this phase, subjects are asked to provide more information about their opinions regarding the future values of interest rates, inflation rates, and GDP growth. In this phase, the elicitation questions are framed differently than in STEP 1 to reduce the scope for experimenter demand effects .

4. Post-information Hypothetical loan decision scenarios. In this phase, subjects will face a set of loan application scenarios, which are designed based on the distributions and graphics of the true loan applications officers routinely assess on the platform but that are NOT true and actual loan applications. Loan officers are explicitly informed about the fact that the loan application scenarios are hypothetical and they are asked to behave as if they were making assessments in their daily routine. Decisions involve the extensive margin (whether the loan officer thinks she would accept or reject the hypothetical application) and the intensive margin (what interest rate the loan officer thinks she would propose to charge if she accepted the application)

Intervention Start Date
2024-05-22
Intervention End Date
2024-10-31

Primary Outcomes

Primary Outcomes (end points)
Credit allocation decisions at the extensive margin (loan approval/denial) and intensive margin (expected interest rate assigned to a loan, if approves)
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The experiment consists of a 3 (interest rate, inflation, GDP Growth) x 2 (High, Low) factorial design in which each experimental arm is assigned to a different truthful piece of information regarding future macroeconomic conditions. The experiment also includes a control group that is provided with no information.
Experimental Design Details
The experiment consists of a 3 (interest rate, inflation, GDP Growth) x 2 (High, Low) factorial design in which each experimental arm is assigned to a different truthful piece of information regarding future macroeconomic conditions. The experiment also includes a control group that is provided with no information.
Randomization Method
Randomization is done by a computer using a random number generator based on which subject will be assigned to one of the experimental arms.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
500 loan officers
Sample size: planned number of observations
1,500 loan decisions
Sample size (or number of clusters) by treatment arms
80
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Georgetown University IRB
IRB Approval Date
2024-05-21
IRB Approval Number
N/A
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials