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

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

No 15714, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the effect of raising the level and the transparency of financial incentives offered to local agents for acquiring clients of a new banking product on take-up. We find that paying agents higher incentives increases take-up, but only when the incentives are unknown to prospective clients. When disclosed, higher incentives instead have no effect on take-up, despite greater agent effort. This is explained by the financial incentives conveying a negative signal about the reliability and trustworthiness of the product and its providers to potential clients. In contexts with limited information about a new technology, financial incentives can thus affect technology adoption through both a supply-side effect (more agent effort) as well as a demand-side signaling effect (change in demand perceptions). Organizations designing incentive schemes should therefore pay close attention to both the level and the transparency of such incentives.

Keywords: Financial incentives; Pay transparency; Technology adoption (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
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://cepr.org/publications/DP15714 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:15714

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP15714

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().