The authors examine the consequences of an intrusive debt-collection tactic that targets delinquent borrowers’ social circles. Their identification strategy relies on the fact that some of the delinquent loans are not worked on due to collection agents’ excessive workload. The authors show that this tactic backfires and increases the borrowers’ default rate by 5.9 to 14.3 percentage points. Male borrowers and borrowers with better credit respond more strongly. Moreover, the effect is concentrated in the period when this collection practice was emerging and likely unexpected. These findings are consistent with the negative reciprocity interpretation: angered borrowers retaliate by defaulting on their loans.

About the Seminar Series

Financial market development goes hand-in-hand with economic growth. The development of China’s capital markets in terms of size, regulations, capability, and efficiency has been impressive. China may now even lead globally in some dimensions, notably e-payments systems. Yet, China’s capital markets are still a work-in-progress facing both generic and unique challenges. Other Asian capital markets have even greater uneven development. Some in advanced Asian economies have acquired globally acclaimed reputation and capabilities while various regulatory and structural weaknesses dwarf others. Corporations and investors have been inclined to arbitrage cross-border regulatory and developmental gaps; so the very uneven status of capital markets across Asia is a policy issue for the governments in the entire region and perhaps globally. Analyzing the positive and negative lessons in the functioning of Asia’s capital markets, and identifying reforms and applications of technology that could further improve Asian capital markets’ allocation efficiency, financial inclusion, and forewarning against reforms that might cause problems can benefit practitioners, policymakers and researchers, and can contribute significantly to overall prosperity.

The ABFER and the University of Chicago’s Becker Friedman Institute China (BFI-China), in collaboration with National University of Singapore (NUS) Business School, Shanghai Advanced Institute of Finance (SAIF), The Chinese University of Hong Kong (CUHK) Department of Economics, CUHK-Shenzhen and Tsinghua University PBC School of Finance (Tsinghua PBCSF), hope to provide a virtual network to benefit researchers, policymakers, and practitioners from Asia and beyond.

All times are listed in Central Standard Time. A unique Zoom webinar link will be sent to you two days before the event. 

Session Format

Each session lasts for an hour (30 minutes for the author, 15 minutes for the discussion, 15 minutes for participants’ Q&A).


Thursday, November 18, 2021

10:00 AM–11:00 AM

Angry Borrowers: Negative Reciprocity in a Financial Market


Hongjun Yan, Professor of Finance, Chair and Director of Richard H. Driehaus Center for Behavioral Finance, Department of Finance & Real Estate, DePaul University

Discussant: Utpal Bhattacharya, Chair Professor, Department of Finance, Hong Kong University of Science and Technology

Session Chair: Bohui Zhang, Executive Associate Dean, Presidential Chair Professor of Finance; Director of the Center for FinTech and Social Finance, Co-director of MSc in Data Science Programme, Shenzhen Finance Institute, Chinese University of Hong Kong, Shenzhen; Associate Director of Shenzhen Institute of Data Economy