The Price of Asking: Social Frictions in Relational Lending and FinTech Adoption

Last registered on April 14, 2026

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Pre-Trial

Trial Information

General Information

Title

The Price of Asking: Social Frictions in Relational Lending and FinTech Adoption

RCT ID

AEARCTR-0018242

Initial registration date

April 11, 2026

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

April 14, 2026, 9:17 AM EDT

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

Locations

Country

Burundi

Region

Muramvya

Primary Investigator

Name

Yuchen XU

Affiliation

UNSW

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Other Primary Investigator(s)

PI Name

Yuchen Sun

PI Affiliation

University of International Business and Economics

Contact Investigator

PI Name

Pedro Naso

PI Affiliation

Swedish University of Agricultural Sciences

Contact Investigator

PI Name

Mengye Wang

PI Affiliation

The Graduate Institute of International and Development Studies(IHEID)

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Additional Trial Information

Status

On going

Start date

2025-12-13

End date

2026-08-31

Keywords

Behavior, Finance & Microfinance, Welfare

Additional Keywords

JEL code(s)

C93; D91; G21

Secondary IDs

Prior work

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

Abstract

Access to credit is a central determinant of household welfare in low-income settings. Relational lending has been a main source of credit, but it is not socially costless. Borrowing from a friend or neighbor requires asking, negotiating, and potentially damaging the relationship if repayment becomes difficult. This paper uses a lab-in-the-field experiment in rural Burundi to study two such frictions: the mental cost of asking and reputational concern. We recruit real borrower-lender pairs and allow borrowers to finance repeated investment opportunities either through their peer lender or through a simulated FinTech application with fixed, anonymous terms. By exogenously varying the FinApp interest rate, we identify how borrowers’ credit-channel choices respond to the price of anonymous borrowing and recover the implied interest-rate premium associated with avoiding social frictions. We further vary network tie strength and project default risk to isolate the two underlying mechanisms. The design also allows us to study whether anonymous credit crowds out or complements relational lending and whether it improves borrower welfare.

External Link(s)

Registration Citation

Citation

Naso, Pedro et al. 2026. "The Price of Asking: Social Frictions in Relational Lending and FinTech Adoption." AEA RCT Registry. April 14. https://doi.org/10.1257/rct.18242-1.0

Sponsors & Partners

Experimental Details

Interventions

Intervention(s)

We conduct a lab-in-the-field experiment in rural Burundi to study the social frictions embedded in relational lending. We recruit real borrower-lender pairs drawn from existing social networks and embed them in a five-round loan game with real-value incentives. Borrowers face repeated risky agricultural investment opportunities and may finance investment either through their peer lender (via WhatsApp negotiation) or through a simulated anonymous FinTech application (FinApp) with fixed, non-negotiable terms and no interpersonal interaction. We vary three treatment dimensions: (1) the FinApp interest rate (3%, 5%, 8%, 10%, or 15%), which serves as the main price shifter for anonymous credit; (2) the strength of the borrower’s network tie to the peer lender (close tie versus less-close tie), which shifts the mental cost of asking; and (3) whether the assigned investment project places the borrower in an environment with default risk (PD) or not (PN), which shifts reputational concern. Extension arms include a relational-credit-only arm, a FinApp-only arm, a risk-matched no-default-risk project (PN1), and a no-renegotiation arm.

Intervention (Hidden)

Intervention Start Date

2026-04-13

Intervention End Date

2026-07-10

Primary Outcomes

Primary Outcomes (end points)

(1) Negotiation initiation: a binary indicator equal to one if the borrower initiates a WhatsApp loan request to the peer lender in a given round.
(2) FinApp take-up: a binary indicator equal to one if the borrower borrows from FinApp in a given round.
(3) Final token balance: the borrower’s total token balance at the end of the five-round game (main welfare outcome).

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

The primary experiment employs a 5×2×2 factorial design crossing FinApp interest rate (3%, 5%, 8%, 10%, 15%), network tie strength (close tie versus less-close tie), and investment project risk (default risk versus no default risk), yielding 20 cells. Borrower-lender pairs are recruited from real social networks identified in a baseline survey. In each session, borrowers and lenders are seated in separate rooms and communicate via WhatsApp for loan negotiations. Borrowers choose each round whether to borrow from the peer lender, from FinApp, or not at all. Four extension arms (relational-credit-only, FinApp-only, a risk-matched no-default-risk project, and a no-renegotiation arm) are implemented at the two benchmark FinApp rates of 5% and 10%. Final token balances determine real compensation.

Experimental Design Details

Randomization Method

Borrowers were recruited from a baseline survey conducted using a random-walk procedure in randomly selected collines. From the eligible baseline survey sample, borrowers were randomly selected for invitation to the experiment. Each invited borrower was randomly assigned to a tie-strength category, which determined the two eligible nominees from the borrower’s pre-listed borrowing contacts. The borrower then invited one of these two nominees to participate as the peer lender. Eligible borrower-lender pairs were then randomly assigned by computer to the remaining treatment arms using pre-generated assignment lists, with randomization stratified by borrower gender and age.

Randomization Unit

Borrower-lender pair.

Was the treatment clustered?

Yes

Experiment Characteristics

Sample size: planned number of clusters

640 borrower-lender pairs.

Sample size: planned number of observations

2,560 borrower-round observations for the primary round-level outcomes (640 borrower-lender pairs × 4 decision rounds), plus 640 borrower-level observations for the final-balance welfare outcome.

Sample size (or number of clusters) by treatment arms

Primary 5×2×2 factorial (20 cells): 22 pairs per cell, 440 pairs total. This corresponds to 88 pairs at each of the five FinApp-rate arms (3%, 5%, 8%, 10%, 15%), split evenly across 2 tie-strength × 2 project conditions. Extension arms (implemented at 5% and 10% only): 10 pairs per cell, 200 pairs total, comprising 40 pairs in the relational-credit-only arm (4 cells), 40 pairs in the FinApp-only arm (4 cells), 40 pairs in the PN1 arm (4 cells), and 80 pairs in the no-renegotiation arm (8 cells).

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

Supporting Documents and Materials

Documents

Document Name

Protocol

Document Type

irb_protocol

Document Description

This file contains four documents: (1) the instruction sheet for the borrower (available to the participant during the game); (2) the enumerator protocol for the borrower; (3) the instruction sheet for the lender (available to the participant during the game); (4) the enumerator protocol for the lender.

File

Protocol

MD5: 8f5d51be32d539ed55632b2a4f346152

SHA1: 092601d3da61dacc3458077336f34b390afcd96a

Uploaded At: April 11, 2026

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