The Impact of Loan Modifications on Repayment, Bankruptcy, and Labor Supply: Evidence from a Randomized Experiment
The Impact of Loan Modifications on Repayment, Bankruptcy, and Labor Supply: Evidence from a Randomized Experiment
7 July, 2020 •Similar Articles
The role of choice architecture in promoting saving at tax time: Evidence from a large-scale field experiment
A large-scale field experiment (N = 646,116) from the Refund to Savings Initiative tested a choice architecture and persuasive messaging interventi...
A personal touch in text messaging can improve microloan repayment
Because payment delays and defaults significantly affect both lenders and borrowers in fragile economies, strategies to improve timely loan repayme...
SEED: A commitment savings product in the Philippines
Microfinance institutions in developing countries increasingly offer a variety of savings products. Yet few studies have investigated the impact th...
This paper uses a randomized experiment and administrative tax and bankruptcy records to estimate the impact of loan modifications on subsequent outcomes. A large non-profit credit counselling organization and eleven unsecured creditors offered lower interest rates and longer repayment periods to a random subset of 80,000 distressed borrowers. Borrowers offered a lower interest rate were more likely to repay their debts and less likely to file for bankruptcy protection. For the most heavily indebted borrowers, lower interest rates also increased the probability of being employed. In contrast, there was little impact of a longer repayment period on debt repayment, bankruptcy, or employment.