Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment

This paper studies the role of morality in debt repayment, using an experiment with the credit card customers of a large Islamic bank in Indonesia.

• From: Foreign, Commonwealth & Development Office
• Published: 21 October 2020

• Country: Indonesia
• Document Type: Journal Article
• Theme: Economic Growth
• First published: 1 March 2019
• Authors: Bursztyn, L, Fiorin, S, Gottlieb, D and Kanz, M

Abstract

We study the role of morality in debt repayment, using an experiment with the credit card customers of a large Islamic bank in Indonesia. In our main treatment, clients receive a text message stating that 바카라 사이트渘on-repayment of debts by someone who is able to repay is an injustice.바카라 사이트� This moral appeal decreases delinquency by 4.4 percentage points from a baseline of 66 percent, and reduces default among customers with the highest ex-ante credit risk. Additional treatments help benchmark the effects against direct financial incentives, and rule out competing explanations, such as reminder effects, priming religion, and provision of new information.

This is an output of the World Bank바카라 사이트檚 Strategic Research Program

Citation

Bursztyn, Leonardo, Stefano Fiorin, Daniel Gottlieb, and Martin Kanz (2019), 바카라 사이트淢oral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment바카라 사이트�, Journal of Political Economy, 127(4): 1641-1683 DOI: 10.1086/701605

Link

Published 21 October 2020