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Personal communication in an automated world: Evidence from loan repayments

Author

Listed:
  • Laudenbach, Christine
  • Siegel, Stephan

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

  • Laudenbach, Christine & Siegel, Stephan, 2024. "Personal communication in an automated world: Evidence from loan repayments," SAFE Working Paper Series 428, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewp:303038
    DOI: 10.2139/ssrn.3153192
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    More about this item

    Keywords

    Personal Communication; Consumer Finance; Loan Repayment; Promise Keeping; Social Distance;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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