Local Political Pressure and Bankers' Discretion

Last registered on October 13, 2025

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Pre-Trial

Trial Information

General Information

Title

Local Political Pressure and Bankers' Discretion

RCT ID

AEARCTR-0016979

Initial registration date

October 09, 2025

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 13, 2025, 10:39 AM EDT

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

Locations

Country

China

Region

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Primary Investigator

Name

Sirui Wu

Affiliation

Xi'an Jiaotong University

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Other Primary Investigator(s)

PI Name

Qinglu Jin

PI Affiliation

Shanghai University of Finance and Economics

Contact Investigator

PI Name

Yupeng Lin

PI Affiliation

National University of Singapore

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Additional Trial Information

Status

On going

Start date

2025-08-02

End date

2025-12-31

Keywords

Finance & Microfinance

Additional Keywords

JEL code(s)

Secondary IDs

Prior work

This trial does not extend or rely on any prior RCTs.

Abstract

This study investigates how local political priorities influence the professional judgment of commercial bank personnel in credit allocation and loan loss provisioning. We conduct a randomized survey experiment among mid- and senior-level managers from several Chinese commercial banks. By comparing decision outcomes between the treatment and control groups, we aim to identify whether subtle political cues shift loan approval patterns, and loss recognition timing. In addition, we explore the heterogenous effects between regional and national banks. This experiment contributes to understanding how informal political pressures shape financial decision-making and risk assessment within state-influenced banking systems.

External Link(s)

Registration Citation

Citation

Jin, Qinglu, Yupeng Lin and Sirui Wu. 2025. "Local Political Pressure and Bankers' Discretion." AEA RCT Registry. October 13. https://doi.org/10.1257/rct.16979-1.0

Sponsors & Partners

Experimental Details

Interventions

Intervention(s)

Intervention (Hidden)

Intervention Start Date

2025-10-02

Intervention End Date

2025-11-02

Primary Outcomes

Primary Outcomes (end points)

(i) Loan approval.
(ii) Loan loss provisioning.
(iii) Bank heterogeneity.

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

The experiment followed a two-phase design. In Phase 1, all respondents read two loan scenarios. Scenario (iii) is randomly assigned only to the treatment group. They are provided with additional passage summarizing a local government meeting, which conveyed explicit “window guidance” emphasizing the political imperative of supporting key firms and infrastructure projects, and referenced provisioning flexibility. The control group received no such information.

In Phase 2, respondents completed the following decision tasks: (i) loan approval (stricter approval, conditional approval, normal approval, or priority fast-tracking); (ii) loan loss provisioning (timing of expected loss recognition: early, immediate, or delayed); (iii) heterogeneous responses for different types of banks (centralized HQ-led approval vs. decentralized branch discretion).

Experimental Design Details

Randomization Method

Randomization is conducted using a coin-toss procedure in office by a computer.

Randomization Unit

The randomization is conducted at the individual level.

Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters

Approximately 300 individual bank practitioners.

Sample size: planned number of observations

Approximately 300 individual-level observations (primary analysis unit).

Sample size (or number of clusters) by treatment arms

Two-arm design at the individual level:
Control group (no political guidance message): ~150 respondents
Treatment group (exposed to political guidance message): ~150 respondents

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Supporting Documents and Materials

IRB