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Take Up and Impact of Digital Repayment in Microfinance

Last registered on December 22, 2021

Pre-Trial

Trial Information

General Information

Title
Take Up and Impact of Digital Repayment in Microfinance
RCT ID
AEARCTR-0004012
Initial registration date
March 14, 2019

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
March 15, 2019, 10:49 AM EDT

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

Last updated
December 22, 2021, 2:12 PM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation
Evans School, University of Washington

Other Primary Investigator(s)

PI Affiliation

Additional Trial Information

Status
On going
Start date
2021-09-01
End date
2022-12-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Digital technology is rapidly emerging as integral to the future of development policy, and particularly to financial services. Recent years have seen rapid digitization in developing countries, from mobile money platforms to biometric smart cards. These innovations are largely perceived as beneficial, saving users on both sides of the transaction effort and time, and often enabling better monitoring. The use of mobile money to streamline payments is only becoming more commonplace. Despite this, relatively little is known about the effects of switching to mobile money. We propose to undertake a randomized control trial to evaluate the effects of digital repayment for microfinance, looking both at barriers to take-up and the effects of digital repayment on the integrity of the microfinance joint liability model.

There are two main channels through which digital repayment might negatively affect repayment behavior and default rates. First, digital repayment will result in reduced observability of loan repayments by other group members. Second, digital repayment will make meeting attendance less mandatory, which might decrease the social cohesion of microfinance groups. We assess both channels by experimentally manipulating whether microfinance clients in some groups repay digitally, and observe repayment performance, the quality of observation of the loan performance of other group members, and social interactions by group members.

We also randomly assign the selection mechanism, creating three groups: a control group that still repays with cash, an individual choice group where individual borrowers are each allowed to opt in or out of digital repayment, and a digital repayment group where all borrowers in that group are asked to repay digitally. This randomization also allows us the unique opportunity to assess the impact of digital repayment on those who would not choose it willingly, allowing insight into an important dimension of impact heterogeneity. We believe this would be the first study to identify the causal effects of digital repayment on a population which would not have chosen it, yielding crucial insight into the effects of increasing levels of digital repayment penetration.

We also experimentally test whether an (incentivized) pre-choice use of the mobile money repayment system makes prospective borrowers more likely to take up mobile money-based repayment, using an experiment embedded in our baseline.
External Link(s)

Registration Citation

Citation
Cohen, Isabelle and Denise Ferris. 2021. "Take Up and Impact of Digital Repayment in Microfinance." AEA RCT Registry. December 22. https://doi.org/10.1257/rct.4012-2.3000000000000003
Former Citation
Cohen, Isabelle and Denise Ferris. 2021. "Take Up and Impact of Digital Repayment in Microfinance." AEA RCT Registry. December 22. https://www.socialscienceregistry.org/trials/4012/history/107322
Experimental Details

Interventions

Intervention(s)
In this study, we test the effects of borrowers switching to mobile money-based repayment for microfinance loans.
Intervention Start Date
2022-01-24
Intervention End Date
2022-07-31

Primary Outcomes

Primary Outcomes (end points)
Our key outcomes of interest are initial take-up of digital finance, effects of digital repayment on business outcomes, social and familial outcomes for borrowers, and effects of digital repayment on participation and repayment success in microfinance.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We randomly divide microfinance groups into three category to test the effects of digital repayment on microfinance: a control group that still repays with cash, an individual choice group where individual borrowers are each allowed to opt in or out of digital repayment, and a digital repayment group where all borrowers in that group are asked to repay digitally. The randomization is done at the microfinance group-level.

As well, we embed a baseline experiment which randomly varies the motivation to complete a practice deposit in the same account which will be used for mobile repayment, testing whether practice increases the likelihood of uptake.
Experimental Design Details
Randomization Method
Randomization done in office by a computer
Randomization Unit
Microfinance groups
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
710 microfinance groups
Sample size: planned number of observations
10,000 microfinance clients
Sample size (or number of clusters) by treatment arms
Group-level randomization: 236 groups control, 237 groups individual choice, 237 groups digital repayment. Randomization will be stratified at the level of the nine branches under which the groups are organized.

Embedded in the baseline, conducted for a subsample of 2000 borrowers, we will do individual-level variation of an information treatment related to mobile money repayment.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
University of California, Berkeley
IRB Approval Date
2019-06-06
IRB Approval Number
2019-03-11912
Analysis Plan

Analysis Plan Documents

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials