AEA RCT Registry

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

Country

Turkey

Region

Primary Investigator

Name

Deniz Aydin

Affiliation

Washington University in St. Louis

Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status

Completed

Start date

2014-06-01

End date

2017-12-31

Keywords

Finance & Microfinance

Additional Keywords

consumption, credit, MPC, precautionary savings

JEL code(s)

D15, E21, E51, H31

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

Sponsors & Partners

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

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)

Supporting Documents and Materials

IRB

Institutional Review Boards (IRBs)

IRB Name

Stanford

IRB Approval Date

2014-05-28

IRB Approval Number

29432

Analysis Plan

Consumption Response to Credit Expansions

Pre-Trial

General Information

Locations

Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Registration Citation

Sponsors

Interventions

Primary Outcomes

Secondary Outcomes

Experimental Design

Experiment Characteristics

Institutional Review Boards (IRBs)

Post-Trial

Study Withdrawal

Intervention

Data Publication

Program Files

Relevant Paper(s)

Reports & Other Materials