Research on results

[Guest]

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[curiouscat]

Does anyone know of resources with research on results?  I would like to read about research on actual field results - what differences in people lives that took out loans are visible?  A central source collecting links to such research would be great (the kivapedia hopefully).

The other topic I would like to see research or articles on is the interest rate charged.  Do those borrowing money at 70% interest really benefit greatly?  If so, great.  But it worries me that maybe such high rates (even if they are lower than the averages available locally) could harm the borrowers as much as help them.  I would love to know whether it makes sense to lend when the rate is under say 30% for the greatest possible impact, or to learn that really that rate doesn't by itself define the potential success.

I would appreciate any links to studies.  I really love what Kiva does but would love to see some results backing up the nice feeling of the process.

[Canadian Here]

Dear Curiouscat:
I am not sure if it's possible to undertake this kind of research. I say that because what is a "benefit' to some is not necessarily a "benfit' to others. This is all very subjective stuff. Terms , such as "benefit" would have to be clearly defined. Agreeing upon such definitions is always a source of fun...many disagreements typically ensue.   
You have not said how interest rates, of say 70%, as in your example, could "harm" a borrower although you have stated that you think this might be the case. I'd like to know more about that opinion before commenting upon it. From my perspective, taking the worst case scenario, the microbusiness would fail later than sooner (i.e. without the loan). How is this harmful? Surely, a few months more of  income is preferable to the alternative of starvation and/or homelessness, which for many, would likely be the alternative.
This area is frought with many potential difficulties, statistically, as one can readily ascertain from my reply. The topic is highly subjective and subjective things are difficult, at best, to quantify.
I hope this is somewhat helpful although I am unable to provide a link to the research you are requesting. I thought I should take the opportunity to partially explain (some) of the reasons that the documentation yoiu seek may not be readily obtainable.
Lorna

[Jan & John]

I am trusting that Kiva is doing their "due diligence" on my behalf.  Each country will have differing needs or challenges that will change what benefit each borrower gains.

They say that they screen each MFI and post the average interest charged by that partner and other local lenders on the about\partners page.  They also post the overall average of all Kiva Partners which is currently showing 22% with the partners and 83% with local lenders.  That appears to be quite a benefit in itself.

I find the best "research" for me is the stories related in the "blogs from the field". 

[Canadian Here]

John & Jan:
Thanks for your input.
It's always a pleasure to 'meet' another Canadian on KIVA! 
I have no trouble believing the rates of interest, as cited by KIVA.
However, I think Curiouscat wanted to go beyond that (i.e. wanted to know the benefit of the loan, at various rates of interest, to particular borrowers). That was my impression, anyway. I doubt that the answer would be the same for every borrower, even at the same rate. I suspect, just as here, some people are able to make better use of (borrowed) funds than others. 
I also have difficulty with the term, "benefit", which likely means different things to many people, depending upon their needs, geographic location and many other variables too numerous to list here. Some people who have/earn little may regard a small improvement in their income/lifestyle as a being significant "benefit" to them, while others who have a little more might not be as pleased with the identical outcome. 
I think it is fair to say, that many, if not most, of the microbusiness owners who have received funding indirectly through KIVA, are pleased to have had the loan. The fact that many of them speak of wanting to take out another loan as soon as they can is a pretty strong indicator of their satisfaction with the process and the outcome. 
The Journals are a good source of this kind of information, as you rightly pointed out. 
Thanks again for your input!
Lorna











 

[RichardF]

Hi Curiouscat, have you had a chance to check out the Kiva - Learn page?  It has quite a few interesting resources, such as The Virtual Library on Microcredit.

[Soriak]

With regards to the interest rates: Remember that the buyers voluntarily seek out a loan with the MFI partners. If the interest rates were unfavorable, they would not do so and instead apply at a competing credit business. The very low default rate would indicate that the entrepreneurs aren't driven into more poverty by them and surely the terms are clearly spelled out for the borrowers.

One of the reasons for the seemingly high rate are fixed costs. If it costs $30 to disburse and collect on the loan and it's only one for $200 and over 6 months, then that's a 30% interest just to cover those fixed costs. Add to that the inflation that is in many countries much higher than in the US. Because the loan goes to the MFI in US Dollars and has to be repaid in such, the interest rate also has to reflect currency fluctuations. Although we lenders accept the default risk, the currency risk is with the MFIs.

I'm not aware of any study that has been done to look at Kiva businesses. On a global scale, Kiva isn't more than a blip of course - $27m from Kiva compared to the $50bn in annual foreign aid from the US government alone. (That's more than 1,500 times the money raised through Kiva) The effect on the individual level is probably best seen through journal entries.

[pimschaaf]

This response is half on topic, with a list of research but not specifically aimed on results in the field.

As a partial result of my thesis I have listed scientific research on the subject of Kiva.org.

You can find the list on http://adf.ly/8YlDA (skip the ad).

Hope this helps.