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Intrinsic and Extrinsic Motivation in Financial Transactions: Evidence from Islamic Credit Cards
Last registered on March 05, 2015

Pre-Trial

Trial Information
General Information
Title
Intrinsic and Extrinsic Motivation in Financial Transactions: Evidence from Islamic Credit Cards
RCT ID
AEARCTR-0000635
Initial registration date
March 03, 2015
Last updated
March 05, 2015 1:13 PM EST
Location(s)
Region
Primary Investigator
Affiliation
University of California, San Diego
Other Primary Investigator(s)
PI Affiliation
The World Bank
PI Affiliation
The Wharton School, University of Pennsylvania
PI Affiliation
UCLA Anderson School of Management
Additional Trial Information
Status
In development
Start date
2015-01-19
End date
2015-08-31
Secondary IDs
Abstract
We partner with an Islamic bank in Indonesia which sends text messages to its customers who are late on their credit card debt repayment. We randomize the content of the text messages across customers: some receive simple reminders; some receive information about the financial consequences of being late on debt repayment; others receive information about the religious doctrine on being late on debt repayment. The purpose of the texts is to encourage repayment by reminding borrowers that they are late on their credit card repayments, or by leveraging extrinsic motivation (informing them about about the financial consequences of non-repayment) or intrinsic motivation (informing them about about the religious consequences of non-repayment).
We test - if our texts influence repayment of the customers, and - whether the mechanism behind the effect is a change in beliefs about the consequences of delaying payment. We also test- whether this effects depends on the religiosity and the trust in institutions of the customers and the environment in which they live and - if intrinsic motivation for repaying debt can be crowded out by financial incentives.
Finally the bank offers restructuring offers to some customers, and complement our analysis on willingness to pay with a test of the effectiveness of changing customers ability to pay. Using the take-up of restructuring offers we also plan to estimate the monetary value of religious and non-religious reminders about credit card repayment.
External Link(s)
Registration Citation
Citation
Bursztyn, Leonardo et al. 2015. "Intrinsic and Extrinsic Motivation in Financial Transactions: Evidence from Islamic Credit Cards." AEA RCT Registry. March 05. https://doi.org/10.1257/rct.635-2.0.
Former Citation
Bursztyn, Leonardo et al. 2015. "Intrinsic and Extrinsic Motivation in Financial Transactions: Evidence from Islamic Credit Cards." AEA RCT Registry. March 05. https://www.socialscienceregistry.org/trials/635/history/3738.
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Experimental Details
Interventions
Intervention(s)
We partner with an Islamic bank in Indonesia and work with a sample of its customers being late on their credit card debt repayment. We send text messages to these customers randomizing the content of the text with the purpose of encouraging their repayment. We also offer restructuring offers to a limited amount of customers.
Intervention Start Date
2015-02-16
Intervention End Date
2015-05-16
Primary Outcomes
Primary Outcomes (end points)
Repayment
Primary Outcomes (explanation)
Repayment: indicator for whether the customers make at least the minimum payment he is required to make within 3 days after receiving the text message.
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
We partner with an Islamic bank in Indonesia and work with a sample of its customers being late on their credit card debt repayment.
We randomize those customers in nine groups.
(1) Customers in group 1 serve as control and receive not text message (apart from a reminder which the bank sends to all of its credit card customers on the due date);
(2) Customers in group 2 receive a simple reminder asking for repayment;
(3) Customers in group 3 receive a text informing customers of the existence of a credit registry which all banks can consult (and asking for repayment);
(4) Customers in group 4 receive a text informing customers of the existence of a credit registry and stating this affect their ability to get credit since all banks consult the registry (and asking for repayment);
(5) Customers in group 5 receive a religious placebo message reporting a quote from the Prophet (and asking for repayment);
(6) Customers in group 6 receive a religious message reporting a quote from the Prophet saying that "Delay in paying debt by a person who can afford is an injustice" (and asking for repayment);
(7) Customers in group 7 receive both the message about credit registry of group 4 and the religious message of group 6;
(8) Customers in group 8 receive tow simple reminders asking for repayment;
(9) Customers in group 9 are offered restructuring offers by phone calls (details to be defined).

We test whether the content of the text message influences repayment behavior.
For the religious text (group 6) we test whether:
- our text increases repayment of credit card debt;
- our text changes beliefs about the severeness of the religious consequences of delaying repayment;
- the effects depend on the importance the customers (and people living close to them) gives to the rules of Islam and Sharia Law.
For the credit registry texts (group 3 and 4) we test whether:
- informing customers about the existence of a credit registry increases repayment of credit card debt;
- informing customers also about the effectiveness of the credit registry has an additional effect on repayment of credit card debt;
- our text changes beliefs about the severeness of the financial consequences of delaying repayment;
- the effects depend on the confidence the customers (and people living close to them) have in the enforcement of laws and banking contracts.
By sending to some customer both our religious and our credit registry texts (group 7) we test if intrinsic motivation crowds out extrinsic motivation in the context of financial transactions.
Finally we offer to some customers restructuring offers (group 9), and complement our analysis on willingness to pay with a test of the effectiveness of changing customers ability to pay.
Experimental Design Details
Randomization Method
Each month the bank send us the list of customers being late. One of the PI does the randomization using STATA, and send back the list of customers divided into the different treatments.
Randomization Unit
The randomization is at the level of the individual customer.
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
13100 customers
Sample size: planned number of observations
13100 customers
Sample size (or number of clusters) by treatment arms
1600 control, 1600 simple reminder, 1600 credit registry existence, 1600 credit registry effectiveness, 1600 religious placebo, 1600 religious information, 1600 credit registry effectiveness & religious information, 1600 double reminder, 300 restructuring offer. [Final sample size may vary depending on total monthly number of non-repaying customers]
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
UCLA Institutional Review Board
IRB Approval Date
2015-03-05
IRB Approval Number
IRB#15-000313
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
No
Is data collection complete?
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
Reports and Papers
Preliminary Reports
Relevant Papers