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Field
Trial Title
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Before
Visual Nudges and Borrower Loan Choices: Evidence from a Field Experiment
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After
Visual Nudges in Lending
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Field
Abstract
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Before
We work with a government-backed online lending platform in China to examine borrowers’ loan choices. The platform allows borrowers to directly borrow money from banks. Banks will list their loan products on the platform. Any individual or a small business with a valid Chinese ID can register with the platform and apply for loans. From the platform’s historical data and the pilot study, we find that borrowers often make sub-optimal decisions by choosing loans with worse characteristics (e.g., high interest rate, slow processing time, low approval rate). In this study, we examine whether a simple visual nudge by labeling the loan product can change borrowers’ loan choices, potentially helping them make better decisions.
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After
In this study, we examine whether providing a simple visual nudge by labeling the loan product can change borrowers’ loan choices, potentially helping them make better decisions. We work with a government-backed online lending platform in China. The platform allows borrowers to directly borrow money from banks. Banks will list their loan products on the platform. Any individual with a valid Chinese ID can register with the platform and apply for loans. We randomly assign borrowers into one of the following four groups: 1) a control group with no label; 2) a treatment group where a label is placed on the loan with the lowest interest rate; 3) a treatment group where a label is placed on the loan with the fastest processing time; and 4) a treatment group where a label is placed on the loan with the highest approval rate. By comparing borrowers’ loan choices between the control and treatment groups, we estimate the causal impact of visually salient labels on borrower decision-making in consumer lending.
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Trial Start Date
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Before
October 09, 2024
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After
September 15, 2025
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Trial End Date
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Before
December 09, 2024
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After
December 15, 2025
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Field
Last Published
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Before
October 18, 2024 04:40 PM
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After
September 21, 2025 05:21 PM
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Intervention (Public)
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Before
We place labels on loan products on a government-backed online lending platform in China. The platform allows borrowers to directly borrow money from banks.
a. Control group: no label.
b. Treat 1: Lowest rate label – we place a label on the loan with the lowest spread
c. Treat 2: Fastest processing time label - we place a label on the loan with the fastest processing time
d. Treat 3: Highest success rate label - we place a label on the loan with highest historical approval rate
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After
We work with a government-sponsored lending platform in China. When borrowers apply for loans on the platform, the platform will prompt a survey asking the borrower to fill in basic background information, such as education and income range, as well as their requested loan amount maturity, and the ability to provide collateral.
Based on the borrower’s loan application, the platform will recommend five loan products to the borrower. The borrower can apply for one or more of those recommended loans. Once the borrower applies, the bank is notified and will start to process the loan application.
Treatment: Once the borrower completes the survey, she will be randomly assigned to one of the following groups:
a. Control group: no label.
b. Treatment 1: Lowest rate label – we place a label on the loan with the lowest interest rate.
c. Treatment 2: Fastest processing time label - we place a label on the loan with the fastest processing time
d. Treatment 3: Highest success rate label - we place a label on the loan with the highest approval rate.
We observe whether the borrower applies for a loan and which loan product the borrower picks.
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Field
Intervention Start Date
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Before
October 09, 2024
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After
September 15, 2025
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Field
Intervention End Date
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Before
December 09, 2024
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After
December 15, 2025
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Field
Primary Outcomes (End Points)
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Before
1. Whether the borrower applies for a loan
2. The loan product that the borrower selects
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After
1. Whether the borrower applies for a loan.
2. The loan products that the borrower selects.
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Field
Experimental Design (Public)
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Before
Subject recruitment: we work with a government-sponsored lending platform in China to recruit potential borrowers. As borrowers log into the platform, the platform will prompt a survey asking the borrower to fill in basic background information, such as gender, age, income range, as well as their loan demand, i.e., how much money they want to borrow and duration.
Based on the borrower’s loan application, the platform will recommend 5 loan products to the borrower. The borrower can apply for one or more of those recommended. Once the borrower applies, the bank is notified and will start to process the loan application.
Treatment: Once the borrower completes the survey, she will be randomly assigned to one of the following groups:
a. Control group: no label.
b. Treat 1: Lowest rate label – we place a label on the loan with the lowest spread
c. Treat 2: Fastest processing time label - we place a label on the loan with the fastest processing time
d. Treat 3: Highest success rate label - we place a label on the loan with highest historical approval rate
We observe which loan product the borrower picks and how much time the borrower spends on selecting the loan product.
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After
We work with a government-sponsored lending platform in China. When borrowers apply for loans on the platform, the platform will prompt a survey asking the borrower to fill in basic background information, such as education and income range, as well as their requested loan amount maturity, and the ability to provide collateral.
Based on the borrower’s loan application, the platform will recommend five loan products to the borrower. The borrower can apply for one or more of those recommended loans. Once the borrower applies, the bank is notified and will start to process the loan application.
Treatment: Once the borrower completes the survey, she will be randomly assigned to one of the following groups:
a. Control group: no label.
b. Treatment 1: Lowest rate label – we place a label on the loan with the lowest interest rate.
c. Treatment 2: Fastest processing time label - we place a label on the loan with the fastest processing time
d. Treatment 3: Highest success rate label - we place a label on the loan with the highest approval rate.
We observe whether the borrower applies for a loan and which loan product the borrower picks.
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Field
Randomization Method
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Before
We work with the lending platform to design a program that randomly assigns the borrower to the control group or one of the three treatment groups. The randomization is done via a random number generator that generates a number between 1 to 4. The probability of entering each group is 25%.
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After
We work with the lending platform to implement a dual-randomization design—across both treatment assignment and loan order, which enable us to examine the causal effect of visually salient labels on borrower loan choices.
Treatment assignment randomization: we randomly assign a borrower to the control group or one of the three treatment groups. The randomization is done via a random number generator that generates a number between 1 to 4. The probability of entering each group is 25%.
Loan order randomization: we also randomize the order in which loan products are displayed. This ensures that the labeled loan is equally likely to appear in any position on the loan product list (i.e., first, second, third, etc.)
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Randomization Unit
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Before
Randomization is at the individual level
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After
Treatment assignment is randomized at the individual borrower level; loan order randomization is implemented at the loan level.
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Planned Number of Clusters
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Before
We plan to recruit about 1,500 individuals for the experiment. Based on the pilot study, approximately 30% of the individuals will apply for at least one loan. Therefore, our expected sample size is about 450 individual borrowers. Given that each borrower will receive 5 recommended loan products, we expect to have 450*5=2,250 borrower-loan pairs in our sample.
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After
No
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Planned Number of Observations
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Before
At least 450 borrowers. At the loan level, we will have at least 2,250 borrower-loan pairs (each borrower applies to maximum of 5 loans).
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After
About 1,500 borrowers.
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Sample size (or number of clusters) by treatment arms
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Before
Approximately 450 borrowers divided into four groups (three treatment and one control). Approximately 112 borrowers per group.
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After
Approximately 1,500 borrowers divided into four groups, with about 375 in the control group, and 375 in each of the treatment arms.
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Power calculation: Minimum Detectable Effect Size for Main Outcomes
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Before
Based on our pilot study, the minimum detectable effect size is 50 individual borrowers, or equivalently, 249 borrower-loan pairs, for a 5% significance level.
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After
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Additional Keyword(s)
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Before
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After
Visual nudges, bank lending, access to credit
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Intervention (Hidden)
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Before
Borrowers are randomly placed into four groups (one control and three treatment) via a random number generator program that we embed in the platform.
a. Control group: no label.
b. Treat 1: Lowest rate label – we place a label on the loan with the lowest spread
c. Treat 2: Fastest processing time label - we place a label on the loan with the fastest processing time
d. Treat 3: Highest success rate label - we place a label on the loan with highest historical approval rate
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After
We work with a government-sponsored lending platform in China. When borrowers apply for loans on the platform, the platform will prompt a survey asking the borrower to fill in basic background information, such as education and income range, as well as their requested loan amount maturity, and the ability to provide collateral.
Based on the borrower’s loan application, the platform will recommend five loan products to the borrower. The borrower can apply for one or more of those recommended loans. Once the borrower applies, the bank is notified and will start to process the loan application.
Treatment: Once the borrower completes the survey, she will be randomly assigned to one of the following groups:
a. Control group: no label.
b. Treatment 1: Lowest rate label – we place a label on the loan with the lowest interest rate.
c. Treatment 2: Fastest processing time label - we place a label on the loan with the fastest processing time
d. Treatment 3: Highest success rate label - we place a label on the loan with the highest approval rate.
We observe whether the borrower applies for a loan and which loan product the borrower picks.
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