The Power of Non-Monetary Incentive: Experimental Evidence from P2P Lending in China

Brusa, Francesca; Luo, Xueming; Fang, Zheng

doi:10.2139/ssrn.3405902

Cited by 4 publications

(9 citation statements)

References 20 publications

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“…Previous studies highlight both the repayment and repayment time (Brusa et al, 2019;Du et al, 2020), which vitally affect the performance and revenue of financial enterprises. The repayment reflects whether the customer defaults, accounting for the amount of outstanding loans.…”

Section: Conceptual Background 21 Debt Collectionmentioning

confidence: 99%

“…Although debt collection calls are the most widely used and effective strategy, that still get less research attention than text messages or e-mails. For example, the reminding strategies proposed by Cadena and Schoar (2011); the moral appeal, shame and guilt-arousing strategies described by Troiano (2018); the prosocial strategy suggested by Du et al (2020); and the reputation concern strategy utilized by Brusa et al (2019) are all conducted by text message. Therefore, how persuasion works in debt collection calls should be studied.…”

Section: Conceptual Background 21 Debt Collectionmentioning

confidence: 99%

“…Ge et al (2017) found that the social strategy affects collection; when borrowers choose to self-disclose their social media accounts or have a strong social media presence, they have a lower probability of delinquency. Brusa et al (2019) tested a novel reputation-based incentive both in parallel to and coupled with the accommodative monetary strategy in China and revealed that the social strategy is as effective as the monetary strategy within the first 24 h.…”

Section: Debt Collection Strategymentioning

confidence: 99%

“…As the persuasive strategy works in debt collection (Brusa et al, 2019;Johnson et al, 2020), we focused on comparing the strategies' effectiveness, consistent with the practice in debt collection departments (Cauberghe et al, 2009). As long as the loan is delinquent, the company will contact the customer for collection.…”

Section: Model Evidencementioning

confidence: 99%

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Carrots or sticks in debt collection services? A voice metrics and text analysis of debt collection calls

Liao

Yang

et al. 2021

JSTP

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PurposeAlthough phone calls are widely used by debt collection services to persuade delinquent customers to repay, few financial services studies have analyzed the unstructured voice and text data to investigate how debt collection call strategies drive customers to repay. Moreover, extant research opens the “black box” mainly through psychological theories without hard behavioral data of customers. The purpose of our study is to address this research gap.Design/methodology/approachThe authors randomly sampled 3,204 debt collection calls from a large consumer finance company in East Asia. To rule out alternative explanations for the findings, such as consumers' previous experience of being persuaded by debt collectors or repeated calls, the authors selected calls made to delinquent customers who had not been delinquent before and were being called by the company for the first time. The authors transformed the unstructured voice and textual data into structured data through automatic speech recognition (ASR), voice mining, natural language processing (NLP) and machine learning analyses.FindingsThe findings revealed that (1) both moral appeal (carrot) and social warning (stick) strategies decrease repayment time because they arouse mainly happy emotion and fear emotion, respectively; (2) the legal warning (stick) strategy backfires because of decreasing the happy emotion and triggering the anger emotion, which impedes customers' compliance; and (3) in contrast to traditional wisdom, the combination of carrot and stick fails to decrease the repayment time.Originality/valueThe findings provide a valuable and systematic understanding of the effect of carrot strategies, stick strategies and the combinations of them on repayment time. This study is among the first to empirically analyze the effectiveness of carrot strategies, stick strategies and their joint strategies on repayment time through unstructured vocal and textual data analysis. What's more, the previous studies open the “black box” through psychological mechanism. The authors firstly elucidate a behavioral mechanism for why consumers behave differently under varying debt collection strategies by utilizing ASR, NLP and vocal emotion analyses.

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Section: Conceptual Background 21 Debt Collectionmentioning

confidence: 99%

Section: Conceptual Background 21 Debt Collectionmentioning

confidence: 99%

Section: Debt Collection Strategymentioning

confidence: 99%

Section: Model Evidencementioning

confidence: 99%

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Carrots or sticks in debt collection services? A voice metrics and text analysis of debt collection calls

Liao

Yang

et al. 2021

JSTP

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“…We also contribute to the literature exploring enforcement mechanisms, such as using reminders (Du et al, 2020), social preferences (Brusa, Luo, and Fang, 2019;Hage, Söderholm, and Berglund, 2009;Kahan and Posner, 1999;Kandori, 1992), and financial incentives (Andreoni, Harbaugh, and Vesterlund, 2003;Luo et al, 2017;Xiao and Houser, 2005); to deter non-compliance activities. The majority of the studies focus on a single mechanism (Abbink et al, 2014;Bhanot, 2017;Bao, Gangadharan, and Leister, 2020…”

Section: Introductionmentioning

confidence: 99%

Gender Differences in Reactions to Enforcement Mechanisms: A Large-Scale Natural Field Experiment

Huang

Bao

2024

SSRN Journal

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We followed 58,345 borrowers from a peer-to-peer lending platform to study how females and males react to enforcement mechanisms differently. In the experiment, borrowers were randomized into treatments where they received different text messages urging for timely repayment if they had loans due the "next day". Compared to a reminder message, the messages inducing social pressures and financial incentives reduced the overdue rate for both genders. However, females were more responsive to messages producing social pressures, while males were more responsive to financial incentives. The results imply the potential importance of a gender-dependent mechanism to enhance compliance.

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How to say? Voice analytics of debt collection strategies

et al. 2021

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Since limit attention has been paid on debt collection calls and collectors' voice metrics, this study explores how collectors' voice metrics influence borrowers' delinquent behavior in debt collection calls. Results of survival analysis show that collectors' voice with higher pitch, higher speed, lower loudness, and lower entropy of energy prolongs borrowers' delinquent time. Mediation analysis indicates that borrowers' voice energy and call duration mediate the effects of collectors' voice metrics on delinquent time. Additional analysis on heterogeneity suggests that short‐term and long‐term repayment borrowers respond to collectors' voice metrics differently.

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The Power of Non-Monetary Incentive: Experimental Evidence from P2P Lending in China

Cited by 4 publications

References 20 publications

Carrots or sticks in debt collection services? A voice metrics and text analysis of debt collection calls

Carrots or sticks in debt collection services? A voice metrics and text analysis of debt collection calls

Gender Differences in Reactions to Enforcement Mechanisms: A Large-Scale Natural Field Experiment

How to say? Voice analytics of debt collection strategies

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