In order to determine the most effective incentive program to encourage loan repayment in Uganda, researchers placed participants in one of three groups. The first group were offered a monetary reward once all of their payments were complete. This monetary incentive was effectively the same amount as a 25% decrease in interest on the loan. The second group was offered an actual 25% interest rate reduction for the participants' following bank loan. Finally, the third group was sent a text message each month before their loan payment was to be paid, reminding them to pay their loan. The text messages resulted in roughly the same effects as the other two conditions.
Other Applications: Energy Efficiency, Health and Wellbeing