When Transparency Fails: Financial Incentives for Local Banking Agents in Indonesia

Erika Deserranno, Firman Witoelar and Gianmarco León-Ciliotta
Authors registered in the RePEc Author Service: Gianmarco León-Ciliotta ()

No 1233, Working Papers from Barcelona School of Economics

Abstract: We study the effect of raising the level and the transparency of ï¬ nancial incentives offered to local agents for acquiring clients of a new banking product on take-up. We ï¬ nd that paying agents higher incentives increases take-up and usage, but only when the incentives are unknown to prospective clients. When disclosed, higher incentives instead have no effect on take-up and usage, despite greater agent effort. This is explained by the ï¬ nancial incentives conveying a negative signal about the reliability and trustworthiness of the product and its providers to prospective clients. Organizations designing incentive schemes should therefore pay attention to both the level and the transparency of such incentives.

Keywords: trust; financial incentives; pay transparency; branchless banking (search for similar items in EconPapers)
JEL-codes: D84 G28 J31 M52 O14 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-sea
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Citations: View citations in EconPapers (3)

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Working Paper: When Transparency Fails: Financial Incentives for Local Banking Agents in Indonesia (2021)
Working Paper: When transparency fails: Financial incentives for local banking agents in Indonesia (2021)
Working Paper: When transparency fails: Financial incentives for local banking agents in Indonesia (2021)
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