USA loans

[Guest]

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[Data Mobility Group]

Existing/new capital being diverted, is still capital being diverted. No?

No, not exactly.

You assume that the funds, recycled or new, would have been applied toward loans of the type that you obviously believe are more important. Others, frankly, may not agree with you, nor share your loan preferences. I wrote about this extensively in earlier posts in this thread.

Have you interviewed any of the lenders? What percentage of the interviewees confirmed that they had diverted funds originally intended for loans outside the US to loans within the US? And of those individuals, what percentage of available funds did they choose to reallocate

Frankly, it sickens me that people insist on demonizing loans with which they disagree on any basis. As I wrote earlier, rather than berating the choices of others - in this case Kiva's decision to make loans available in the States - folks should highlight the positive outcomes of their own choices and let members decide for themselves how they wish to allocate funds.

[alan]

There are 426 loans in fund raising status now. The days of "Feast or Famine" might be over, but too much feast might be worse than famine, as the left over banquet food means loans un-funded.

But really, that's a problem only if people regularly fill up on the newest food to be added to the banquet, leaving some perfectly good food to spoil, if I may continue your metaphor. There are quite a few loans coming close to expiring, but meantime a significant number of newer ones get funded in minutes or hours, depending on the size. I know I've made this point before. Why should these wait to be funded while others are added at the front of the queue and get funded in short order? I think there's capital enough to go around. But, to return to the metaphor, if we make a conscious effort to eat the food that's been there for a while rather than immediately rushing to the latest dish, it would all go in its own time. Kiva could help that by rethinking the way it presents the buffet table.

[wind5001]

I always wanted enough choice on the Kiva website to make us truly able to choose.

In fact, I even hoped for some loans to expire unfunded, mainly if they were loans where the MFI did a sloppy/poor job at writing the loan write-up. Now that most of the MFIs pre-fund the loans and basically only let us take over the risk (which is fine with me), it would really be a punishing of the MFI for a job not well done rather than the borrower, who has nothing to do with the MFI write-up. Therefore, I do not mind loans going unfunded at all.

[waywardcats]

Frankly, it sickens me that people insist on demonizing loans with which they disagree on any basis. As I wrote earlier, rather than berating the choices of others - in this case Kiva's decision to make loans available in the States - folks should highlight the positive outcomes of their own choices and let members decide for themselves how they wish to allocate funds.

Thank you Joseph!  I agree completely.  Live and let live.

I would like to bring in another piece of evidence to this discussion of new capital.  That being this recent tweet from Matt Flannery:

mattflannery Thinks @Kiva is growing at a pace similar to a niche e-commerce company about 20 hours ago from web

I took this to mean that there was evidence of new growth at Kiva, but not really being familiar with "niche e-commerce companies" or their history I could have misconstrued this.  Anyone feel comfortable interpreting this?

Thanks,

-Kerry-

[RichardF]

I think the question whether the US loans are diverting capital from the non-US loans can be pretty easily answered in the affirmative.

Ah, but can it?...
Based on other people's calculations, I would think not.  

First, I believe the bottom line question on this issue is, "Have any non-U.S. loans gone unfunded?"  The answer to that one is, "Not yet."

So, the diversion question as a causative reason for something that hasn't happened is secondary.  Still, it's worth considering. 

One way to look at this is in terms of "the pie."  "Is the slice of the pie for non-U.S. loans getting smaller?"  Of course it is.  There wasn't a U.S. slice at all until this month, so the other slice went from all of the pie to the rest of the pie.

So, this part of the question isn't so much about are the non-U.S. loans getting less of the pie, but, "Are the non-U.S. getting less pie than they need?"  As long as all loans get funded, the answer to that question is, "No."  That's the real bottom line question and answer as far as I'm concerned.

A related question from the introduction of U.S. loans goes something like this,  "Is the pool of available funds for loans growing since the introduction of the U.S. loans?"  My preliminary answer to this is, "Yes!"

Thanks to the work of Sherry and Ian, we already have some numbers to check that out. 



Looking at the Kiva Daily Loans transactions for this year, we can see the jagged line for June 10 forward stays pretty much between $200,000/day and $400,00/day.  That's quite a bit above the $100,000 - $300,000 daily squiggles for the month's just before the introduction of U.S. loans.



The sawtooth pattern of Kiva Loans Outstanding for this year shows a steady growth a the top end, meaning the Kiva loan portfolio (the pie) continues to grow.

So, daily lending has increased, the pie is growing, and no non-U.S. loans have gone unfunded.  My conclusion from these verifiable facts is that the gloom-and-doom predictions from Kiva introducing U.S. loans do not seem to have yet occurred.

[tomviolence]

I thought "niche e-commerce company" was 90's speak for "dot com bubble about to burst, but, please keep on sending money as we are burning it at a record pace".

But, I am cynical.

[tomviolence]

looking at your second chart Richard, it looks like the amount paid off each month is about 3 million (difference between top of saw and bottom), so if 4 million is lent, that means we are aquiring new capital at about 1 million a month.

With any other function that adds to iteslf over time, this means exponential growth. The new money brought in, even if it goes only to US loans, once that is returned to the lender, it might be re-lent to either US or foreign borrowers, causing a multiplication effect.

Yes, some might cease loaning or withdraw funds, but I think the overall effect will be positive.
The US loans have a very long payback period. There is another benefit here. People will have less credit than what is needed for a full loan, so they might be tempted add fuunds to continue to loan over the three years or so of getting emails saying they have a new credit.

[JohnR]

Quoting Australia yesterday:

I think the question whether the US loans are diverting capital from the non-US loans can be pretty easily answered in the affirmative.

Check the lenders listed on the US loans and the vast majority (I calculated 94% **) were existing lenders who were previously lending to the third world.

Doesn't this indicate just the opposite, that non-US loans were diverting money from US loans?  Lenders were sending some of their funds overseas because there was no domestic alternative?

John

[Canadian Here]

Quoting Australia yesterday:

Doesn't this indicate just the opposite, that non-US loans were diverting money from US loans?  Lenders were sending some of their funds overseas because there was no domestic alternative?

John

John & Austrailia:

I don't think either scenario is 100% accurate. Many Kiva lenders want to loan both in the USA and abroad and some of us are prepared to add additional funds to ensure this happens.
In that instance, one group is not "diverting" anything from the other.

Lorna (& "The Critters")

[YowieFreak]

Existing/new capital being diverted, is still capital being diverted. No?

According to YowieFreak: "the 'loans fully funded' amount also shows similar numbers to the previous months". So, with no increase in additional "new" capital, I'd say diversion was happening.

Lies, damned lies, and statistics! 

Taking a comment I made about how the post-15th lending should not be compared to pre-15th lending, and applying it to some completely unrelated matter is, well, it's just wrong! 

If you had asked me, I could have pointed out that the pre-15th lending this month was higher than would have been expected without the launch of the USA loans but, because there were only about $200k worth of USA loans and that represents only about one or two days of total funding, and the fact that the total amount being loaned each month is increasing by a figure of a similar order of magnitude, and the fact that funding in the first part of this month was decidely slower than in previous months, there is just no way to tell whether there was any reduction in amounts loaned to non-USA loans because of the introduction of USA loans.

The one thing I can tell you is that no-one was forced to loan to a USA entrepreneur who didn't want to.  And what people do with their money is their business, not yours, not mine.