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A Personal Touch in text messaging can improve microloan repayment

Because payment delays and defaults significantly affect both lenders and borrowers in fragile economies, strategies to improve timely loan repayment are needed to help make credit markets work smoothly. Karlan, Morten and Zinman worked with two microlenders to test the impact of randomly assigned text message reminders for loan repayments in the Philippines. Messages improved repayment only when they included the account officer’s name and only for clients serviced by the account officer previously. These results highlight the potential and limits of communication technology for improving loan repayment rates. They also suggest that personal connections between borrowers and bank employees can be harnessed to help overcome market failures. Download the full report here.

Sarah Corley
Sarah is DFI's Community & Professional Development Manager, and is responsible for providing opportunities for capacity building of DFS professionals and DFI alumni outside of our online course provision. She has over 19 years of experience within the learning and capacity development within the development and health sector, and is passionate about being a catalyst for change.

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