How can social obligations be induced on a digital platform?
igital credit offers a compelling opportunity to lower the costs and barriers to accessing Credit. Recent research has suggested that this increased access has led to improved household resilience to shocks (Bharadwalj, 2019).
Yet, timely borrower repayment is a challenge for credit institutions. Stringent policies such as blacklisting, have been adopted to drive timely repayments and finalize collections, however, they have proven quite expensive and can have negative long-term impacts on borrowers.
Recently, cost effective approaches have been sought out such as the use of behavioral nudges. Particularly in the peer-to-peer market, the use of social levers have the potential to encourage borrowers to prioritize repayment based on social responsibility.