← Search

When Transparency Fails: Financial Incentives for Local Banking Agents in Indonesia

Erika Deserranno¹; Gianmarco León-Ciliotta²; Firman Witoelar³

¹ Bocconi University · ² U. Pompeu Fabra & BSE · ³ Australian National University

Abstract We study the effect of raising the level and transparency of financial incentives offered to local agents for acquiring clients of a new banking product on take-up. We find that paying agents higher incentives increases take-up and usage, but only when the incentives are unknown to prospective clients. When disclosed, higher incentives have no effect on take-up and usage, despite greater agent effort. This is due to the financial incentives sending a negative signal to potential clients about the reliability and trustworthiness of the product. Hence, when designing incentives, organizations should consider both their level and transparency.

DOI

10.1162/rest_a_01359

Volume

107 (6)

Pages

1537-1552

Language

en

Export

BibTeX

Sources

openalex crossref