Abstract
Two for-profit Philippine banks, aiming to increasing microlending to the poor, incorporated a widely used poverty measurement tool into their loan applications and tested the tool using randomized training content. Treated loan officers were provided an explanation of the tool's purpose; exhortation tying the tool to the organizations' social missions; and reassurance that these data, conditional on other characteristics, do not predict default and thus should not jeopardize incentive pay based on portfolio performance. The control group training merely labeled the tool “additional household information.” The strategy backfired, leading to no additional poor applicants and potentially lower-performing loans. Descriptive evidence suggests the training exacerbated loan officer misperceptions about compensation incentives and multitasking problems. This cautionary tale is an example of why management may want include social outcomes directly into employee performance evaluations, or silo corporate social responsibility efforts from core operations.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 510-522 |
| Number of pages | 13 |
| Journal | Journal of Economics and Management Strategy |
| Volume | 32 |
| Issue number | 3 |
| DOIs | |
| State | Published - Aug 1 2023 |
Funding
Approval from the Yale University Human Subjects Committee, IRB0510000752 and from the Innovations for Poverty Action Human Subjects Committee, IRB #07October-002. The project was registered on the AEA RCT Registry (AEARCTR-0000165). For project management and field support we thank Innovations for Poverty Action; specifically: Varun Kshirsagar, Kareem Haggag, Megan McGuire, Faith McCollister, Mark Miller, Sarah Oberst and Bernie Seville. For collaboration we thank the senior management and staffs at First Macro Bank, FICO Bank, and Grameen Foundation. We also thank Leah Kim for support on the data replication materials. The authors retained full intellectual freedom to report and interpret the results throughout the study. All errors and opinions are those of the authors.
ASJC Scopus subject areas
- General Business, Management and Accounting
- Economics and Econometrics
- Strategy and Management
- Management of Technology and Innovation
