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


Martin Kantz (World Bank)
2 Mar 2018 (Friday)
10:15 - 11:45 am
Room TBC, LSK Building, HKUST


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.


This research project is conducted by Leonardo Bursztyn, Stefano Fiorin, Daniel Gottlieb, and Martin Kanz.



Martin Kanz is an Economist in the finance team of the Development Research Group at the World Bank. His research focuses on banking, behavioral economics, and the political economy of the credit market. Martin has led numerous field experiments on financial sector topics, primarily in India and Southeast Asia. He received his A.B. in Economics from Harvard University, his M.Sc. in Development Economics from Oxford, and his Ph.D. from Harvard University.


This academic seminar is co-organized with the Department of Finance, HKUST.

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