Relationship Banking in India

Last registered on February 08, 2017
View Trial History

Pre-Trial

Trial Information

General Information

Title
Relationship Banking in India
RCT ID
AEARCTR-0001979
Initial registration date
February 08, 2017

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
February 08, 2017, 7:48 PM EST

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

Locations

Country
India
Region

Primary Investigator

Name
Antoinette Schoar
Affiliation
MIT
Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status
Completed
Start date
2007-07-01
End date
2009-06-30
Keywords
Finance & Microfinance
Additional Keywords
JEL code(s)
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)
J-PAL Summary Page

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. https://www.socialscienceregistry.org/trials/1979/history/13883
Sponsors & Partners
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)
Supporting Documents and Materials
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
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
June 30, 2009, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
June 30, 2009, 12:00 +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, Papers & Other Materials

Relevant Paper(s)

Abstract
Citation
Antoinette Schoar, "The Personal Side of Relationship Banking." Working Paper 2013.
URL
https://www.povertyactionlab.org/sites/default/files/publications/804%20ASchoarPaper_WB.pdf

Reports & Other Materials