
The Supply and Demand Effects of Financial Incentives: Experimental Evidence from Branchless Banking in Indonesia International DevelopmentPre-Results Acceptances
Erika Deserranno Gianmarco León-Ciliotta Firman Witoelar Kartaadipoetra
We propose to test the effects of an increase of monetary incentives paid to frontline service providers and the effect of making their pay transparent on the take-up of a new technology. The context is one of a large bank that hires local branchless banking agents to introduce a new savings account in a rural and largely unbanked area of Indonesia. These agents are (a) randomized into receiving a high vs. low piece rate for recruiting new customers, and (b) randomized into whether or not the piece rate is revealed to the community. The goal of our experiment is to shed light on the supply- and demand-side effects of monetary incentives: While high incentives can increase the agent’s effort, they can also convey a signal about the quality of the product, the agent, or the bank to potential clients. If the signal is negative, then raising financial incentives may backfire, even though they increase agents’ effort and particularly so if they are made public knowledge in the village. Ultimately, our project will contribute to our understanding of how financial incentives paid to frontline workers can affect the adoption of new beneficial technologies in developing countries