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Cultivating Self-Control in FinTech: Evidence from a Field Experiment on Online Consumer Borrowing

Published online by Cambridge University Press:  08 June 2021

Di Bu ,
Tobin Hanspal ,
Yin Liao Open the ORCID record for Yin Liao [Opens in a new window]  and
Yong Liu
Di Bu
Affiliation:
Macquarie University Department of Applied Finance di.bu@mq.edu.au
Tobin Hanspal
Affiliation:
Vienna University of Economics and Business Institute for Finance, Banking and Insurance tobin.hanspal@wu.ac.at
Yin Liao*
Affiliation:
Macquarie University Department of Applied Finance
Yong Liu
Affiliation:
Wuhan University of Science and Technology michael_ly@wust.edu.cn
*
yin.liao@mq.edu.au (corresponding author)
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Abstract

We report the results of a longitudinal intervention with students across 5 universities in China designed to reduce online consumer debt. We allocate participants to either a financial literacy treatment group, a self-control treatment group, or a zero-touch control group. Our self-control training intervention features detailed tracking of spending and borrowing, budgeting, and introspection about consumption choices. This intervention reduces online borrowing and delinquency charges, mainly driven by a reduction in entertainment-related spending and borrowing. In contrast, financial literacy interventions improve test scores but only marginally affect borrowing. Our results suggest that cultivating self-regulation and budgeting skills can improve borrowing behavior on e-commerce platforms.

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Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 57 , Issue 6 , September 2022 , pp. 2208 - 2250
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

We thank an anonymous referee, and the editor, Jarrad Harford, for thoughtful comments that improved the paper considerably. We also thank Galina Andreeva, Steve Heinke, Christine Laudenbach, Benjamin Loos, Yuri Pettinicchi, Jialan Wang, and participants at the Third Fintech and Internet Finance Forum, Goethe University Frankfurt, University of Technology Sydney, and WU Vienna for helpful comments and suggestions. This project was initiated when Yin Liao visited Di Bu at Macquarie University. They acknowledge hospitality received from Macquarie University. Hanspal thanks the Joachim Herz Stiftung for generous support, and Liu thanks the Major Philosophy and Social Sciences Research Program of Hubei Province Higher Education Committee (Grant No.:19ZD016).

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