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

Bursztyn, Leonardo, Fiorin, Stefano, Gottlieb, Daniel ORCID: 0000-0002-0555-6185 and Kanz, Martin (2019) Moral incentives in credit card debt repayment: evidence from a field experiment. Journal of Political Economy, 127 (4). 1641 - 1683. ISSN 0022-3808

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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.

Item Type:	Article
Official URL:	https://www.journals.uchicago.edu/toc/jpe/current
Additional Information:	© 2019 The University of Chicago
Divisions:	Management
Subjects:	H Social Sciences > HN Social history and conditions. Social problems. Social reform H Social Sciences > HG Finance
JEL classification:	D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Personal Finance G - Financial Economics > G2 - Financial Institutions and Services > G20 - General G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages Z - Other Special Topics > Z1 - Cultural Economics; Economic Sociology; Economic Anthropology > Z10 - General Z - Other Special Topics > Z1 - Cultural Economics; Economic Sociology; Economic Anthropology > Z12 - Religion
Date Deposited:	26 Oct 2019 11:39
Last Modified:	11 Sep 2025 10:05
URI:	http://eprints.lse.ac.uk/id/eprint/102225

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