Consumption Response to Credit Expansions

Last registered on February 21, 2021

Pre-Trial

Trial Information

General Information

Title
Consumption Response to Credit Expansions
RCT ID
AEARCTR-0000608
Initial registration date
February 02, 2015

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 02, 2015, 2:53 PM EST

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

Last updated
February 21, 2021, 11:47 AM EST

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

Locations

Region

Primary Investigator

Affiliation
Washington University in St. Louis

Other Primary Investigator(s)

Additional Trial Information

Status
Completed
Start date
2014-06-01
End date
2017-12-31
Secondary IDs
Abstract
This paper reports the results of a large-scale field experiment to study how personal consumption expenditures respond to credit shocks. I design a controlled trial implemented at a large European retail bank in Turkey that constructs a randomized credit limit increase, on average, $1,600, or 145% of average monthly income. The intervention deliberately and temporarily pauses the internal underwriting process for a randomly selected subset of 45,307 customers preapproved for a lender-initiated credit limit increase, creating a counterfactual withheld from receiving the limit increases for nine months. I then use the experimental shock in conjunction with rich administrative data on spending, contract choice, and balance sheets to track the impulse responses and estimate average and heterogeneous treatment effects—marginal propensities to borrow and spend—by comparing cardholders who receive the credit line extension at different times.
External Link(s)

Registration Citation

Citation
Aydin, Deniz. 2021. "Consumption Response to Credit Expansions." AEA RCT Registry. February 21. https://doi.org/10.1257/rct.608
Former Citation
Aydin, Deniz. 2021. "Consumption Response to Credit Expansions." AEA RCT Registry. February 21. https://www.socialscienceregistry.org/trials/608/history/85991
Experimental Details

Interventions

Intervention(s)
This paper reports the results of a large-scale field experiment to study how personal consumption expenditures respond to credit shocks. I design a controlled trial implemented at a large European retail bank in Turkey that constructs a randomized credit limit increase, on average, $1,600, or 145% of average monthly income. The intervention deliberately and temporarily pauses the internal underwriting process for a randomly selected subset of 45,307 customers preapproved for a lender-initiated credit limit increase, creating a counterfactual withheld from receiving the limit increases for nine months. I then use the experimental shock in conjunction with rich administrative data on spending, contract choice, and balance sheets to track the impulse responses and estimate average and heterogeneous treatment effects—marginal propensities to borrow and spend—by comparing cardholders who receive the credit line extension at different times.
Intervention Start Date
2014-09-01
Intervention End Date
2017-12-31

Primary Outcomes

Primary Outcomes (end points)
spending, contract choice, and balance sheets
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Assignment of subjects to the control group is done after the customers have been preapproved for a limit extension but before the limits are pushed. Participants are first stratified into nonoverlapping and exhaustive bins with respect to their end-of-billing-cycle balances over limits. A random subsample is then drawn from each bin using a random number generator, and these participants are assigned to the treatment group. The treatment group is then pushed downstream in the underwriting process for limit increases. The control group is withheld from lender-initiated credit line increases for 9 months starting in September 2014 by altering the decision rule governing automatic underwriting.
Experimental Design Details
Randomization Method
STATA
Randomization Unit
Individuals are grouped on the basis of credit card utilization, defined as the ratio of end-of-month credit card balances to credit limit. I first estimate a distributed lag-model on the observational data for each utilization decile. The standard errors of the MPC estimates are higher for high utilization individuals, therefore I under-sample individuals that have a low credit card utilization, proportional to the standard errors.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
45,307 individuals
Sample size: planned number of observations
45,307 individuals
Sample size (or number of clusters) by treatment arms
12,683 control, 32,624 treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Stanford
IRB Approval Date
2014-05-28
IRB Approval Number
29432

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
December 31, 2017, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
December 31, 2017, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
45,307 individuals
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
Final Sample Size (or Number of Clusters) by Treatment Arms
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials