A Second Chance at Financial Inclusion: The Impact of Repayment Plans and Incentives on Delinquent Digital Credit Borrowers

Last registered on March 06, 2024
View Trial History

Pre-Trial

Trial Information

General Information

Title
A Second Chance at Financial Inclusion: The Impact of Repayment Plans and Incentives on Delinquent Digital Credit Borrowers
RCT ID
AEARCTR-0008994
Initial registration date
February 19, 2024

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
March 06, 2024, 2:19 PM EST

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

Locations

Country
Zambia
Region

Primary Investigator

Name
Alfredo Burlando
Affiliation
University Of Oregon
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Brock Wilson
PI Affiliation
University of Oregon
Contact Investigator
PI Name
Silvia Prina
PI Affiliation
Northeastern University
Contact Investigator
PI Name
Michael Kuhn
PI Affiliation
University of Oregon
Contact Investigator

Additional Trial Information

Status
In development
Start date
2024-03-15
End date
2025-12-30
Keywords
Behavior, Finance & Microfinance
Additional Keywords
digital credit; default; repayment plans
JEL code(s)
D14, D18, G51, O16
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In a field experiment with a mobile digital lender in southern Africa, we offer repayment plans (breaking down a full repayment into four equal installments) and future loan eligibility (conditional on repayment) to delinquent borrowers. Using a 2x2 experimental design and administrative data from the lender, we identify the causal impact of each intervention, along with their interactive impact, on repayment rates
and future credit-seeking and repayment behavior. Using baseline and endline phone surveys, we also identify impacts on borrower well-being, beliefs about the value of credit, and overall financial inclusion.
External Link(s)

Registration Citation

Citation
Burlando, Alfredo et al. 2024. "A Second Chance at Financial Inclusion: The Impact of Repayment Plans and Incentives on Delinquent Digital Credit Borrowers." AEA RCT Registry. March 06. https://doi.org/10.1257/rct.8994-1.0
Sponsors & Partners

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information
Experimental Details

Interventions

Intervention(s)
Intervention (Hidden)
In this study, jointly with a large digital lender operating in several African countries, we propose to evaluate two interventions aimed at increasing repayment of digital loans in Zambia to gain insights on what drives repayment in the industry. These interventions are targeted at clients with overdue loans and are the following:
• Repayment Plan. Clients are provided the opportunity to repay the overdue loan through four equally sized weekly installments rather than a standard lump-sum repayment. Clients first receive an introductory SMS alerting them of the repayment plan. Then, each week, clients receive additional SMS reminders about the upcoming installment deadline. If an installment is missed, the balance is spread equally over the remaining weeks. The client is considered to have successfully completed the repayment plan if the loan is paid in full after 30 days.
• Eligibility notice. Clients receive a one-time notification restoring loan eligibility if the loan is paid in full within a period of 30 days. The statement is provided through an SMS.
We will identify the causal impact of each intervention, along with their interactive impact, on repayment rates, and future credit-seeking and repayment behavior. Using baseline and endline phone surveys, we will also identify impacts on borrower well-being, beliefs about the value of credit, and overall financial inclusion.
Intervention Start Date
2024-03-18
Intervention End Date
2024-06-15

Primary Outcomes

Primary Outcomes (end points)
Loan Repayment after 30 days
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
1.) Overall indebtedness and recent borrowing
2.) Financial resilience
3.) Mental health status
4.) Perceptions over access to future credit
5.) Long-term borrowing
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Clients with overdue loans and will be randomized into one of four treatment arms:
• Repayment Plan: Clients are provided the opportunity to repay the overdue loan through four equally sized weekly installments rather than a standard lump-sum repayment. Clients first receive an introductory SMS alerting them of the repayment plan. Then, each week, clients receive additional SMS reminders about the upcoming installment deadline. If an installment is missed, the balance is spread equally over the remaining weeks. The client is considered to have successfully completed the repayment plan if the loan is paid in full after 30 days.
• Eligibility notice: Clients receive a one-time notification restoring loan eligibility if the loan is paid in full within a period of 30 days. The statement is provided through an SMS.
• Eligibility notice x Repayment Plan: see above
• Control: Clients receive text messages about the total amount they owe
Experimental Design Details
Randomization Method
Randomization by Stata
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
N/A
Sample size: planned number of observations
4500 individuals
Sample size (or number of clusters) by treatment arms
1000 control, 1000 treatment 1, 1000 treatment 2, 1000 treatment 3, 500 pure 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
University of Oregon
IRB Approval Date
2022-02-11
IRB Approval Number
STUDY00000406
IRB Name
University of Zambia Biomedical Research Ethics Committee
IRB Approval Date
2022-03-17
IRB Approval Number
2630-2022
Analysis Plan

Analysis Plan Documents

Second Chance PAP

MD5: a8824ed7600ec54847f90d3d5b72bff9

SHA1: a54ce77ea618832b6310883a060704522a7356a7

Uploaded At: February 19, 2024

Post-Trial

Post Trial Information

Study Withdrawal

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information

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