Moral incentives in credit card debt repayment: evidence from a field experiment

Leonardo Bursztyn, Stefano Fiorin, Daniel Gottlieb () and Martin Kanz ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study the role of morality in debt repayment, using an experiment with the credit card customers of a large Islamic bank in Indonesia. In our main treatment, clients receive a text message stating that \non-repayment of debts by someone who is able to repay is an injustice." This moral appeal decreases delinquency by 4.4 percentage points from a baseline of 66 percent, and reduces default among customers with the highest ex-ante credit risk. Additional treatments help benchmark the effects against direct financial incentives, and rule out competing explanations, such as reminder effects, priming religion, and provision of new information.

Keywords: credit cards; household finance; religion; moral suasion (search for similar items in EconPapers)
JEL-codes: D14 G20 G21 Z10 Z12 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2019-08
New Economics Papers: this item is included in nep-exp, nep-isf, nep-pay and nep-sea
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Citations: View citations in EconPapers (42)

Published in Journal of Political Economy, August, 2019, 127(4), pp. 1641 - 1683. ISSN: 0022-3808

Downloads: (external link)
http://eprints.lse.ac.uk/102225/ Open access version. (application/pdf)

Related works:
Working Paper: Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment (2018)
Working Paper: Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:102225

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