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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
Last updated
February 21, 2021 11:47 AM EST
Location(s)
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.608-4.1.
Former Citation
Aydin, Deniz. 2021. "Consumption Response to Credit Expansions." AEA RCT Registry. February 21. http://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
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
December 31, 2017, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
December 31, 2017, 12:00 AM +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