Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment

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

No 21611, NBER Working Papers from National Bureau of Economic Research, Inc

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 the share of delinquent customers by 4.4 percentage points from a baseline of 66 percent, and reduces default among the customers with the highest ex-ante credit risk. Additional treatments help benchmark the effects against those of direct financial incentives, understand the underlying mechanisms, and rule out competing explanations, such as reminder effects, priming religion, signaling the lender's commitment to debt collection, and provision of new information.

JEL-codes: D14 G02 G21 Z10 Z12 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-exp, nep-hpe and nep-sea
Note: CF DEV LE POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published as Leonardo Bursztyn & Stefano Fiorin & Daniel Gottlieb & Martin Kanz, 2019. "Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment," Journal of Political Economy, vol 127(4), pages 1641-1683.

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Working Paper: Moral incentives in credit card debt repayment: evidence from a field experiment (2019)
Working Paper: Moral Incentives in Credit Card Debt Repayment: Evidence from a Field Experiment (2018)
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