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RCT in FinTech Lending
Last registered on March 26, 2020

Pre-Trial

Trial Information
General Information
Title
RCT in FinTech Lending
RCT ID
AEARCTR-0005489
Initial registration date
March 26, 2020
Last updated
March 26, 2020 1:24 PM EDT
Location(s)

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Primary Investigator
Affiliation
University of Texas at Dallas
Other Primary Investigator(s)
PI Affiliation
University of Texas at Dallas
PI Affiliation
University of Texas at Dallas
Additional Trial Information
Status
In development
Start date
2020-03-01
End date
2021-12-31
Secondary IDs
Abstract
We collaborate with a leading Chinese FinTech lending company, to conduct a randomized controlled trial (RCT) to test for information asymmetry in the FinTech consumer credit market. In the experiment, we plan to manipulate three contract terms: interest rate, loan amount, and time to maturity, and offer randomized contracts to loan applicants. We then observe the impact of various treatments (contracts) on: (1) contract acceptance rate by borrowers, (2) loan default rate among the executed loans, (3) gross and net IRR of the loan. We hypothesize that among the pool of borrowers that share the same level of credit score, those who accept less favorable contract terms (e.g. higher interest rate, lower loan amount, and shorter time to maturity) tend to have higher unobservable credit risk, and have higher default rate that cannot be fully explained by credit score. Further, we hypothesize that there may exist a group of borrowers for whom none of the offered contracts can result in profitable lending (on average) because of the adverse selection problem.
External Link(s)
Registration Citation
Citation
Tang, Xiaoxiao , Han Xia and Steven Xiao. 2020. "RCT in FinTech Lending ." AEA RCT Registry. March 26. https://doi.org/10.1257/rct.5489-1.0.
Sponsors & Partners

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Experimental Details
Interventions
Intervention(s)
The company will manipulate three contract terms: interest rate, loan amount, and time to maturity.
Intervention Start Date
2020-03-01
Intervention End Date
2020-07-30
Primary Outcomes
Primary Outcomes (end points)
(1) contract acceptance rate by borrowers, (2) loan default rate among the executed loans, (3) gross and net IRR of the loans.
Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The company will randomly manipulate three contract terms it offers to a loan application: interest rate, loan amount, and time to maturity.
Experimental Design Details
Not available
Randomization Method
Randomization done by computer.
Randomization Unit
Individual
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
3 to 6 credit score groups.
Sample size: planned number of observations
4000-5000 customers.
Sample size (or number of clusters) by treatment arms
All customers are treated with different contracts.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
University of Texas at Dallas
IRB Approval Date
2020-03-24
IRB Approval Number
IRB 20-61