For Giorgia Barboni and Parul Agarwal
How can financial innovations be offered in presence of information frictions without increasing credit risk? We address this question through a randomized experiment with 799 microfinance clients in India. In treated branches, borrowers select between the standard rigid microfinance contract and a more expensive innovative contract designed to mitigate irregular business cash flows through repayment flexibility. In control branches, customers are only offered the standard contract. Offering a menu of contracts that vary in price and flexibility improves business outcomes without deteriorating repayment rates. These effects are driven by a positive self-selection of financially sophisticated borrowers into the flexible contract.
IGC Blog Post IGC Project Webpage AEA RCT Registry
Improving the Adoption of Household Health Products: A Sales Experiment with Chlorine Tablets in Indian Slums, Health Economics, 2021; 30:623-641
For Camille Boudot-Reddy and Anita Mukherjee
We test a door‐to‐door marketing intervention aimed to increase use of a targeted health product among poor households. Specifically, we examine three treatments in which this good–chlorine tablets for drinking water purification–is: (1) sold alone, (2) sold alongside a familiar and cheaper side good that is priced at its retail value, and (3) sold alongside the same side good that is priced on a promotional offer. The side good when sold at retail price is intended to be an “opt‐out” good to reduce the marketing pressure, which should in turn reduce the amount of products sold that go unused. When the side good is sold on promotion, however, we hypothesize that it reintroduces marketing pressure due to the “gift” aspect of the promotion. Consistent with this hypothesis, we find that chlorine use is nearly double in the second condition compared to the other two conditions. Our results suggest that household valuation of a new product is shaped by both the presence and the price of a side good due to marketing pressure.
Toosi, N.R., Voegeli, E.N., Antolin, A., Babbitt, L.G. and Brown, D.K. (2020), Do Financial Literacy Training and Clarifying Pay Calculations Reduce Abuse at Work?. Journal of Social Issues
Understanding the link between effort and pay is important for workers. Yet, in many parts of the world, women lack critical financial literacy skills and have employers who do not clearly communicate compensation schemes. Using randomized controlled trials, we first examined the effects of a training program to improve financial literacy among female workers in apparel factories in India and Bangladesh (baseline N = 1,085). Training increased workers’ financial planning through the use of a budget and utilization of banking systems, both of which contributed to increased savings. We next examined the effects of a management intervention in factories in Myanmar (baseline N = 429) and found improvements among the predominantly female workers in perceived pay clarity. Pay clarity, in turn, was associated with lower verbal abuse in study factories. Results indicate that both financial literacy and pay clarity are important in shaping female workers’ experiences and vulnerability to financial exploitation.
Cross-cultural aspects of guilt and conscientiousness and the mediating role of positive and negative affect for Professor William Tov, Singapore Management University
Examining persuasion in early stage start-ups, Jimmy Le Vagueresse at the London School of Business
Trust in negotiation processes, Professor Donald Ferrin, Singapore Management University