Personal Communication in a Fintech World: Evidence from Loan Payments

58 Pages Posted: 21 Feb 2019

See all articles by Christine Laudenbach

Christine Laudenbach

Goethe University Frankfurt

Jenny Pirschel

ZEW – Leibniz Centre for European Economic Research

Stephan Siegel

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

Multiple version iconThere are 2 versions of this paper

Date Written: 2018

Abstract

We examine the effect of personal, two-way communication on the behavior of borrowers, who have fallen behind on their consumer loan payments. While the lender has informed all borrowers about the delinquency through an automatically generated letter, some borrowers also receive a phone call from a randomly assigned bank agent. We find that borrowers, who speak with a bank agent typically for only a few minutes, are significantly more likely to make timely payments and significantly less likely to default. This finding holds in a subset of hard-to-reach borrowers as well as when we instrument for the call with exogenous variation in borrowers’ reachability. The effect of the call is also persistent. Borrowers, who receive a call, are significantly less likely to become delinquent again. Personal aspects of the call, such as the likeability of the agent’s voice, significantly affect payment behavior, while the surprise element of the call does not. Our results suggest that the form of communication significantly affects borrowers’ payment behavior.

Keywords: Fintech, communication, guilt aversion, prosocial behavior

JEL Classification: D030, D100, D140, G200

Suggested Citation

Laudenbach, Christine and Pirschel, Jenny and Siegel, Stephan, Personal Communication in a Fintech World: Evidence from Loan Payments (2018). CESifo Working Paper No. 7295. Available at SSRN: https://ssrn.com/abstract=3338621

Christine Laudenbach (Contact Author)

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt, 60323
Germany

Jenny Pirschel

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Stephan Siegel

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

Register to save articles to
your library

Register

Paper statistics

Downloads
26
Abstract Views
142
PlumX Metrics