Personal Communication in an Automated World: Evidence from Loan Repayments

Journal of Finance, forthcoming

70 Pages Posted: 16 Apr 2018 Last revised: 18 Jan 2024

See all articles by Christine Laudenbach

Christine Laudenbach

SAFE and Goethe University

Stephan Siegel

University of Washington - Michael G. Foster School of Business; CESifo

Multiple version iconThere are 2 versions of this paper

Date Written: March 30, 2018

Abstract

We examine the effect of personal, two-way communication on the payment behavior of delinquent borrowers. Borrowers who speak with a randomly assigned bank agent are significantly more likely to successfully resolve the delinquency relative to borrowers who do not speak with a bank agent. Call characteristics related to the human touch of the call, such as the likeability of the agent’s voice, significantly affect payment behavior. Borrowers who speak with a bank agent are also significantly less likely to become delinquent again. Our findings highlight the value of a human element in interactions between financial institutions and their customers.

Keywords: Personal Communication, Consumer Finance, Loan Repayment, Promise Keeping, Social Distance

JEL Classification: D14, G11

Suggested Citation

Laudenbach, Christine and Siegel, Stephan, Personal Communication in an Automated World: Evidence from Loan Repayments (March 30, 2018). Journal of Finance, forthcoming, Available at SSRN: https://ssrn.com/abstract=3153192 or http://dx.doi.org/10.2139/ssrn.3153192

Christine Laudenbach

SAFE and Goethe University ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt, 60323
Germany

Stephan Siegel (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

HOME PAGE: http://faculty.washington.edu/ss1110/

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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