Personal communication in an automated world: Evidence from loan repayments

Christine Laudenbach and Stephan Siegel

No 428, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

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 (search for similar items in EconPapers)
JEL-codes: D14 G11 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ban and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:303038

DOI: 10.2139/ssrn.3153192

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