Relationship Banking in India
Last registered on February 08, 2017

Pre-Trial

Trial Information
General Information
Title
Relationship Banking in India
RCT ID
AEARCTR-0001979
Initial registration date
February 08, 2017
Last updated
February 08, 2017 7:48 PM EST
Location(s)
Region
Primary Investigator
Affiliation
MIT
Other Primary Investigator(s)
Additional Trial Information
Status
Completed
Start date
2007-07-01
End date
2009-06-30
Secondary IDs
Abstract
This paper documents a widely overlooked dimension of relationship lending: the personal interaction between the borrower and the lender reduces the willingness of the borrower to engage in moral hazard and default on the loan officer. We conduct a randomized experiment with small business borrowers of the largest commercial bank in India to test the impact of three different levels of interactions between the borrower and the bank. Borrowers who are regularly called either by a single assigned relationship manager or by one manager randomly selected from a small team of managers shows much better repayment behavior and greater satisfaction with the bank services than borrowers who either receive no follow up or only receive follow up calls from the bank when they are delinquent. The results are economically and statistically significant: borrowers who receive the more intensive treatment see a large reduction in the number of late payment spells and delinquencies.
External Link(s)
Registration Citation
Citation
Schoar, Antoinette. 2017. "Relationship Banking in India." AEA RCT Registry. February 08. https://doi.org/10.1257/rct.1979-1.0.
Former Citation
Schoar, Antoinette. 2017. "Relationship Banking in India." AEA RCT Registry. February 08. http://www.socialscienceregistry.org/trials/1979/history/13883.
Experimental Details
Interventions
Intervention(s)
Intervention Start Date
2007-07-01
Intervention End Date
2009-06-30
Primary Outcomes
Primary Outcomes (end points)
Understand impact of relationship lending on borrowing behavior; reduction in defaulting on loans
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
Borrowers were randomly assigned to one of four different groups: three treatment groups and one control group.

In Group A, borrowers are assigned to a personal relationship manager who is the sole interface between the borrower and the bank and who can be directly reached by the borrower via phone or email.

In Group B, borrowers receive exactly the same treatment as Group A with one important difference: instead of interacting with a single relationship manager their contact person varies randomly every time.

In Group C, borrowers only receive a reminder call when a payment due date was approaching.

In Group D, the control, borrowers are treated like the regular small business customer of ICICI bank.
Experimental Design Details
Randomization Method
Computer randomization
Randomization Unit
Individuals
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
1,319 individuals
Sample size: planned number of observations
1,319 individuals
Sample size (or number of clusters) by treatment arms
Group A: 320 individuals (Treatment 1)
Group B: 339 individuals (Treatment 2)
Group C: 324 individuals (Treatment 3)
Group D: 336 individuals (Control)
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Study has received IRB approval. Details not available.
IRB Approval Date
Details not available
IRB Approval Number
Details not available
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
June 30, 2009, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
June 30, 2009, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
1,319 individual accounts
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
1,319 individuals
Final Sample Size (or Number of Clusters) by Treatment Arms
Group A: 320 individuals (Treatment 1), Group B: 339 individuals (Treatment 2), Group C: 324 individuals (Treatment 3), Group D: 336 individuals (Control)
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers
Abstract
Citation
Antoinette Schoar, "The Personal Side of Relationship Banking." Working Paper 2013.