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Abstract We are testing the effectiveness of offering payment flexibility to consumer borrowers in India during the COVID-19 crisis. Borrowers have taken out loans to purchase smartphones with technology allowing the lender to deactivate their phones (with the exception of receiving incoming calls) in the case of nonpayment. We are testing whether offering them an additional 3, or 5 months to repay their loan improves the performance of the loans, how it affects borrowers’ perceptions of the lender, and of the marketplace in general. We are testing the effectiveness of offering payment flexibility to consumer borrowers in India during the COVID-19 crisis. We test whether offering late-paying borrowers who have taken out loans to purchase smartphones in India an additional 3 months to repay their loan improves the performance of the loans, how it affects borrowers’ perceptions of the lender, and their willingness to do repeat business with the lender.
Trial End Date April 30, 2022 April 05, 2022
Last Published March 30, 2021 01:43 PM December 02, 2022 01:16 PM
Intervention (Public) Late-paying borrowers who have taken out loans to purchase smartphones in India will receive phone calls from the lender and will be made different offers. Some borrowers will be offered either a 3 or a 5 months moratorium on their loan in exchange for a small fee. They will be told that the offer is an initiative of the lender to help struggling borrowers. Other borrowers will be made an identical 3 months moratorium offer, but will be told that the offer is made as a result of a new directives from the central bank. Finally, other borrowers will not be made any flexibility offer, and will receive instead either a debt-collection call or a placebo check-in call. Borrowers will receive phone calls with varying content. Treatment A will contain an offer for a 3-month payment holiday on their loan, accompanied my messaging explaining that the offer made is because the company cares for its customers. Treatment B will contain an offer for a 3-month payment holiday on their loan, accompanied my messaging explaining that the offer is made because the regulators have encouraged all lenders to extend such offers. Treatment C will contain an offer for a 5-month payment holiday on their loan, accompanied my messaging explaining that the offer is made because the company cares for its customers. Treatment D/Placebo will contain no offer, but rather a friendly check-in call directing the borrower to informational resources. Treatment E/Control will contain no offer, but rather a request for repayment of the loan, as the lender would do in this situation typically. EXPERIMENT 1 Late-paying borrowers who have taken out loans to purchase smartphones in India receive phone calls from the lender and are made different offers. Some borrowers are offered a 3 months moratorium on their loan in exchange for a small fee. They are told that the offer is an initiative of the lender to help struggling borrowers. Other borrowers are made an identical 3 months moratorium offer, but are told that the offer is made as a result of a new directives from the central bank. Finally, other borrowers are not made any flexibility offer, and receive instead either a debt-collection call or a placebo check-in call. Borrowers receive phone calls with varying content. Treatment 1A contains an offer for a 3-month payment holiday on their loan, accompanied by messaging explaining that the offer made is because the company cares for its customers. Treatment 1B contains an offer for a 3-month payment holiday on their loan, accompanied by messaging explaining that the offer is made because the regulators have encouraged all lenders to extend such offers. Treatment 1C/Placebo contains no offer, but rather a friendly check-in call directing the borrower to informational resources. Treatment 1D/Control contains no offer, but rather a request for repayment of the loan, as the lender would do in this situation typically. EXPERIMENT 2 Participants from treatments 1A and 1B of experiment 1 participate in a second experiment, and are cross-randomized in four conditions. They receive a phone call from the lender and are made different offers. In the first dimension of randomization, some borrowers are offered another loan, while others are offered a non-credit product (“enhanced credit report”). In the second dimension of randomization, some offers are “branded” (mention the name of the lender), while other offers non-branded (do not mention the name of the lender). Participants from treatments 1A and 1B of experiment 1 receive phone calls with varying content. Treatment 2A contains an offer for a branded loan. Treatment 2B contains an offer for a non-branded loan. Treatment 2C contains an offer for a branded report. Treatment 2D contains an offer for a non-branded report.
Intervention Start Date July 06, 2020 November 09, 2020
Intervention End Date September 30, 2021 July 30, 2021
Experimental Design (Public) Borrowers will receive phone calls with varying content. Treatment A will contain an offer for a 3-month payment holiday on their loan, accompanied my messaging explaining that the offer made is because the company cares for its customers. Treatment B will contain an offer for a 3-month payment holiday on their loan, accompanied my messaging explaining that the offer is made because the regulators have encouraged all lenders to extend such offers. Treatment C will contain an offer for a 5-month payment holiday on their loan, accompanied my messaging explaining that the offer is made because the company cares for its customers. Treatment D/Placebo will contain no offer, but rather a friendly check-in call directing the borrower to informational resources. Treatment E/Control will contain no offer, but rather a request for repayment of the loan, as the lender would do in this situation typically EXPERIMENT 1 Borrowers receive phone calls with varying content. Treatment 1A contains an offer for a 3-month payment holiday on their loan, accompanied by messaging explaining that the offer made is because the company cares for its customers. Treatment 1B contains an offer for a 3-month payment holiday on their loan, accompanied by messaging explaining that the offer is made because the regulators have encouraged all lenders to extend such offers. Treatment 1C/Placebo contains no offer, but rather a friendly check-in call directing the borrower to informational resources. Treatment 1D/Control contains no offer, but rather a request for repayment of the loan, as the lender would do in this situation typically. EXPERIMENT 2 Participants from treatments 1A and 1B of experiment 1 receive phone calls with varying content. Treatment 2A contains an offer for a branded loan. Treatment 2B contains an offer for a non-branded loan. Treatment 2C contains an offer for a branded report. Treatment 2D contains an offer for a non-branded report.
Planned Number of Clusters 45,144 in the first month. The sample size for the following months will depend on the number of non-paying customers. Experiment 1: 9.623 individuals Experiment 2: 1,160 individuals
Planned Number of Observations 45,144 in the first month. The sample size for the following months will depend on the number of non-paying customers. Experiment 1: 9.623 individuals Experiment 2: 1,160 individuals
Sample size (or number of clusters) by treatment arms 9,000 in Treatment A 9,000 in Treatment B 4,500 in Treatment C 9,000 in Treatment D/Placebo 13,644 in Treatment E/Control Experiment 1: 1,901 in Treatment A 1,829 in Treatment B 2,452 in Treatment C/Placebo 3,441 in Treatment D/Control Experiment 2 134 in 1A-Treatment 2A branded loan. 133 in 1B-Treatment 2A branded loan. 136 in 1A-Treatment 2B non-branded loan. 124 in 1B-Treatment 2B non-branded loan. 143 in 1A-Treatment 2C branded report. 161 in 1B-Treatment 2C branded report. 159 in 1A-Treatment 2D non-branded report. 169 in 1B-Treatment 2D non-branded report.
Keyword(s) Behavior, Finance, Firms And Productivity Behavior, Finance, Firms And Productivity
Building on Existing Work No
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