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An Evaluation of a Credit-Building Loan Product and Credit-Building Counseling
Last registered on June 16, 2016

Pre-Trial

Trial Information
General Information
Title
An Evaluation of a Credit-Building Loan Product and Credit-Building Counseling
RCT ID
AEARCTR-0000441
Initial registration date
October 06, 2014
Last updated
June 16, 2016 6:21 PM EDT
Location(s)
Primary Investigator
Affiliation
Northwestern University
Other Primary Investigator(s)
PI Affiliation
RAND
PI Affiliation
Consumer Financial Protection Bureau
PI Affiliation
RAND
Additional Trial Information
Status
Completed
Start date
2014-10-16
End date
2016-10-31
Secondary IDs
Abstract
RAND and Innovations for Poverty Action (IPA) are conducting a rigorous evaluation of a credit-building loan offered at a credit union in the Midwest, financial counseling offered over the phone, and a product add-on that encourages automated payments into a savings account called “Pay Yourself Back.” The evaluation employs a cross-cutting encouragement design, with the loan product and counseling services randomly encouraged at the start of study participation. For participants who are encouraged to take up the loan product and open the loan, the “Pay Yourself Back” add-on will be randomized six months prior to the completion of loan repayment. The study will examine the impact of the loan product, counseling services, and the encouragement for automated savings payments on credit, savings, debt, and loan repayment rates in the short and long term. It will also examine whether self-selection into the loan product is indicative of credit worthiness.
External Link(s)
Registration Citation
Citation
Burke, Jeremy et al. 2016. "An Evaluation of a Credit-Building Loan Product and Credit-Building Counseling ." AEA RCT Registry. June 16. https://doi.org/10.1257/rct.441-2.0.
Former Citation
Burke, Jeremy et al. 2016. "An Evaluation of a Credit-Building Loan Product and Credit-Building Counseling ." AEA RCT Registry. June 16. https://www.socialscienceregistry.org/trials/441/history/8909.
Sponsors & Partners

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Experimental Details
Interventions
Intervention(s)
Hidden.
Intervention Start Date
2014-10-16
Intervention End Date
2015-02-28
Primary Outcomes
Primary Outcomes (end points)
➢ Credit Score
- FICO
- Vantage Score
➢ Credit Report Measures
- Balance on recent loans
- Number of accounts late
- Open revolving credit limit
➢ Debt/Credit Attitudes and Behavior
- Credit awareness
- Debt repayment
- Future credit usage
➢ Savings Levels
➢ Selection Bias of those who choose to take up credit-building loan
- Comparing credit and savings outcomes of those who are interested in the loan and not encouraged to take it up with those of the group who are not interested in the loan
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
Hidden.
Experimental Design Details
Subjects will be recruited into the study and will provide oral consent to participate. A surveyor will then administer a baseline survey to the participant. Participants will be assigned to initial treatments based on two independent randomizations. First, approximately half of the total sample of participants will be randomly encouraged to call the phone financial counseling service. Additionally, at the end of the survey, the surveyor will give the participant a brief description of the credit-building loan. If the participant is interested in the loan product, they will be randomly placed into two credit-building loan treatment arms: (1) an “easy on-ramp” group that is encouraged to open the loan on the spot, or (2) a “high-angle on-ramp” group that is required to complete EverFi online financial education before opening the loan. Finally, at the six month mark of the loan term, a random subset of credit-building loan borrowers in the study will be offered a “Pay Yourself Back,” program, where they will be encouraged to automate payments into their savings accounts after successful repayment of the loan.
Randomization Method
The cross-cutting randomization of the loan product and counseling services will be implemented by surveyors in credit union branches using a random number generator on a computer. Surveyors will input study participants’ information into a database, which will randomly generate their treatment assignment and display assignment to surveyors. Random assignment between 'easy on-ramp' and 'high angle on-ramp' to open the loan will be contingent on interest in the loan product. The encouragement to enroll in automated savings deposits will be implemented over the phone using a random number generator on a computer.
Randomization Unit
Individual
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
2400 credit union members
Sample size: planned number of observations
2400 credit union members
Sample size (or number of clusters) by treatment arms
T1) Not interested in the loan, not encouraged to call phone financial counseling: 360
T2) Not interested in the loan, encouraged to call phone financial counseling: 360
T3) Interested in the loan, easy on ramp, not encouraged to call phone financial counseling: 420
T4) Interested in the loan, easy on ramp, encouraged to call phone financial counseling: 420
T5) Interested in the loan, high-angle on ramp, not encouraged to call phone financial counseling: 420
T6) Interested in the loan, high-angle on ramp, encouraged to call phone financial counseling: 420
Total: 2400
Note: These estimates assume that 70% of study participants are interested in the loan product.

Additional randomization on credit-building loan borrowers:
T7) Encouraged to automate savings payments (“Pay Yourself Back”): 420
T8) Not encouraged to automate savings payment (“Pay Yourself Back”): 420
Note: These estimates assume that of the study participants who are interested in the loan and encouraged to open it, 840 open the loan.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
RAND Human Subjects Protection Committee (HSPC)
IRB Approval Date
2014-09-24
IRB Approval Number
2013-0660
IRB Name
Innovations for Poverty Action IRB
IRB Approval Date
2014-07-09
IRB Approval Number
1219.14January-001
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers