Personal Communication in an Automated World: Evidence from Loan Repayments

Christine Laudenbach and Stephan Siegel

Journal of Finance, 2025, vol. 80, issue 1, 515-559

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.

Date: 2025
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https://doi.org/10.1111/jofi.13388

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:80:y:2025:i:1:p:515-559

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