Title:Can Social Notifications Help to Mitigate Payment Delinquency in Online Micro-lending? A Field Experiment
Lecturer:Prof. Lu Xianghua, Fudan University
Time: 2019.11.26 14:30-16:30
Location：A622
Abstract:
Online micro-lending has experienced rapid growth worldwide. A key challenge in scaling up the business is managing the cost of debt collection incurred by late repayment and default. We study whether and how a platform can leverage on borrowers’ social connections through automatic social notifications in regulating repayment behavior. In collaboration with a large online micro-lending platform, we conduct a randomized field experiment to investigate the effect of social notifications targeted at different contact groups (core-circle vs. peripheral-circle). Our results show that notifying social contacts of a delinquent regarding the overdue payment significantly improves the repayment rate. Compared to the control group in which no notification messages are sent to the social contacts, notification-triggered social
sanctions and social supports reduce the default rate by more than 50% in both core-circle and peripheral-circle groups. Further, we find that social notifications targeted at the peripheral-circle social contacts are only effective in the short term, its effectiveness decreases with repeated use. By contrast, social notifications targeted at the core-circle social contacts have a lasting effect.
