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Consumer Loan Flexibility

Last registered on July 08, 2020
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Pre-Trial

Trial Information

General Information

Title
Consumer Loan Flexibility
RCT ID
AEARCTR-0006109
Initial registration date
July 05, 2020

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
July 08, 2020, 5:11 PM EDT

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

Locations

Country
India
Region

Primary Investigator

Name
Joseph Hall
Affiliation
Stanford GSB
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Other Primary Investigator(s)

PI Name
Stefano Fiorin
PI Affiliation
UCSD & Bocconi University
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PI Name
Martin Kanz
PI Affiliation
World Bank
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Additional Trial Information

Status
In development
Start date
2020-07-06
End date
2021-03-31
Keywords
Finance & Microfinance, Firms & Productivity
Additional Keywords
Reputation, reciprocity, relationship lending, customer relationship
JEL code(s)
Household Finance, Household Saving, Personal Finance, Non-Bank Financial Institutions, Marketing & Advertising
Secondary IDs
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.
External Link(s)

Registration Citation

Citation
Fiorin, Stefano, Joseph Hall and Martin Kanz. 2020. "Consumer Loan Flexibility." AEA RCT Registry. July 08. https://doi.org/10.1257/rct.6109-1.0
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
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.
Intervention Start Date
2020-07-06
Intervention End Date
2020-09-30

Primary Outcomes

Primary Outcomes (end points)
There are three key outcome variables.

Outcome 1: Responses to surveys. We will survey borrowers to ask about their perceptions of the lender, the government, and the marketplace.

Outcome 2: Long-term repayment rate of loans.

Outcome 3: Willingness of borrowers to do repeat business with the lender.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
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
Experimental Design Details
Randomization Method
Randomized by computer.
Randomization Unit
Individual-level randomization.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: 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.
Sample size: 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.
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
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 University IRB
IRB Approval Date
2020-04-07
IRB Approval Number
55386
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials