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Personal Communication in an Automated World: Evidence from Loan Repayments

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  • CHRISTINE LAUDENBACH
  • STEPHAN SIEGEL

Abstract

We examine the effect of personal, two‐way communication on the payment behavior of delinquent borrowers. Borrowers who speak with a randomly assigned bank agent are significantly more likely to successfully resolve the delinquency relative to borrowers who do not speak with a bank agent. Call characteristics related to the human touch of the call, such as the likeability of the agent's voice, significantly affect payment behavior. Borrowers who speak with a bank agent are also significantly less likely to become delinquent again. Our findings highlight the value of a human element in interactions between financial institutions and their customers.

Suggested Citation

  • Christine Laudenbach & Stephan Siegel, 2025. "Personal Communication in an Automated World: Evidence from Loan Repayments," Journal of Finance, American Finance Association, vol. 80(1), pages 515-559, February.
    • Handle: RePEc:bla:jfinan:v:80:y:2025:i:1:p:515-559
    DOI: 10.1111/jofi.13388
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