Behavioral Messages and Debt Repayment

We conduct a randomized experiment involving 7,063 late-paying clients of a large Colombian bank to compare the effects of text messages that leverage different behavioral motives on loan delinquency. Our results show that receiving a message decreases the likelihood of borrowers being late by 4%. The effects are more pronounced when messages leverage social norms. Using machine learning tools, we find that the effects are concentrated among borrowers with higher credit scores and unsecured loans. A second experiment shows that this type of message is ineffective in preventing on-time borrowers from falling into loan delinquency.

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