High loan default rates pose a significant challenge to the sustainability of microfinance institutions (MFIs). While digital interventions offer promising solutions, their effectiveness, particularly in designing text message reminders, remains underexplored in this context. This study investigates the impact of text message reminders, designed based on Construal Level Theory (CLT), on loan repayment behavior in microfinance. Through a randomized 2 × 2 factorial field experiment involving 767 active borrowers of Addis Ababa Credit and Saving Institution (ADCSI), Ethiopia’s third-largest MFI, we manipulated two key dimensions of psychological distance: temporal distance (reminders sent 1 day vs. 10 days before the due date) and informational distance (messages with vs. without loan amount disclosure). Our findings reveal that text message reminders significantly increase loan repayment rates (25.5
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