Final Version of 5-Minute Kiva Lender Survey for Senior Research Project

[Guest]

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[brwallin]

Hello again, Kiva faithful!

My name is Ben Wallingford and I am a senior at Ohio Wesleyan University researching lending through Kiva for my senior project.

After receiving feedback from Kiva lenders, I have edited my original survey to better capture the main factors that substantially affect a lender's decision to lend to a particular borrower.

Please take another 5 minutes to fill out the FINAL VERSION of my survey! Here's the link :

http://brwallin.checkboxonline.com/Survey.aspx?s=50d3de7aa4c64c078ae3cd41d81ae1f6

Thank you for your time and your dedication to Kiva, and your willingness to improve my survey!  

I will post the results and a synopsis of my findings in late April.

-Ben

[brwallin]

Thank you everyone for taking the time to fill out my survey! I am using the results for my senior project with the research question, "What factors affect a lender's decision to lend to a particular borrower through Kiva?"

The survey is now closed, with over 700 responses! 

I will post the results and a synopsis of my findings in a couple of weeks.

-Ben

[brwallin]

Hey everyone!

Below is a summary of my findings. Thanks for all your help and for taking the time to fill out my survey. If you would like a copy of my full 47-page research project, e-mail me at <benwallingford7@gmail.com>.

"Of 774 Kiva account holders surveyed, the factors significantly affecting their lending decisions to particular borrowers are (in order of importance) -

1. Details of the Intended Use of Loan
2. Country/Region of the Borrower
3. Gender of the Borrower
4. Family Structure of the Borrower
5. Likelihood/Frequency/Schedule of Loan Repayment

According to the survey respondents, details of the intended use of loan is the most important factor when deciding which borrower to lend to. These details include the loan being used for productive purposes, loan being used for a specific purpose, the role the borrower plays in the business, preferences for loans for businesses that are environmentally sustainable/friendly, etc. Many other details were cited for this factor, and some were not "details" of intended use, like creative, original, unusual, "eye-grabbing" loan profile pages.

Country/Region of Borrower was the second-most important factor. The regions lent to most included (in order) Africa, Asia, South America, Latin America, the Middle East, and Southeast Asia.  The countries lent to most included (in order) Philippines, Mexico, Cambodia, Peru, and Afghanistan.  However, the answer dominating the responses for this question was to choose a variety of different countries, in effect "spreading the wealth" to as many countries as possible.

Gender of Borrower was the third-most important factor. Of the respondents that counted gender as an important factor, 96.6% typically lend only to women.

Family Structure of the Borrower was the next important factor. Family structures that respondents prefer to lend to include single-parent families, families with any number of children, families with 3+ children, households with young children, single/widowed women living alone, etc.

The last important factor was the likelihood/frequency/schedule of loan repayment. Factors of repayment affecting this factor were the default rate of the MFI, the repayment schedule, the repayment term, default protection from Kiva, and the delinquency rate Kiva assigns.

Other factors that were important to particular lenders but not significant on average were number of borrowers (individual, group), religious affiliation (or lack thereof) of MFI,
 organization of MFI (for-profit, not-for-profit), and the interest rate charged by MFI.

My regression showed that female lenders tend to lend more to women than their male counterparts"

[o]

Thanks for sharing. Interesting.

[pimschaaf]

Ben,

Thanks once again for your work. I have enjoyed reading your work. It shows a lot of effort has gone into it.

I have two points to discuss regarding your research results (intended as a critical review that through our discussion hopefully will prove to be constructive ).

First, your conclusion that the number of borrowers (individual, group) is, on average, not a significant factor for the determination of lending contradicts the findings of Galak, Small and Stephen (2011) who find that lenders do favor lending to individuals over group loans (consistent with the so-called 'identifiable victim effect', according to the writers).

Second, in your survey you investigate the effect of interest rate on the lender's decision. I can not retrace on what basis you expect your respondents to be aware of the interest rates on loans. Jefferson (2011) describes that interest rates for loans are not described on Kiva.org.

Sources:
Galak, J., Small, D.A. en Stephen, A.T., (2011) Micro-Finance Decision Making: A Field Study of Prosocial Lending. Journal of Marketing Research, 48, S130-S137. Accessed on May 15th, 2012, on http://ssrn.com/abstract=1634949.
Jefferson, P. (2011). An Examination of the Lending Structures of Microfinance. Accessed on May 15th, 2012, on https://docs.google.com/file/d/0B0GMLk-vs-5_SldYeVl1TGFRYkdxczFvN0wyWDAtQQ/edit.

I look forward to your learn your view on these points.

Thanks in advance!

- Pim

[Amy-in-PHX]

I do consider the figures Kiva gives on the field partner page, for the field partner's average interest & fees, compared to the average interest & fees of its MFI peers in the same country, in making lending decisions.  Maybe this is the consideration that came out in the survey.  True, we don't know the interest rate or fees that are being charged on any given loan -- maybe the survey report just needs to be clarified on that point.

[brwallin]

Pim,

Thank you for taking the time to read through my research paper and for giving your reflections.  

On your first point - while I am not familiar with the Galak, Small, and Stephen study, it seems to me that they answer a different question than I do. Let me be clear: my research did not attempt to determine if lenders prefer to lend to individuals or groups. My research sought to determine if the individual/group decision was a significant factor in a lender's decision to lend to a particular borrower, specifically through Kiva. That being said, out of 11 factors, I found it to be the 6th most important. While not significant (significant meaning a factor earning a point value above the average point value a respondent assigned), the individual/group decision ranked in the middle in terms of significance.

In regards to the interest rate comment, on Kiva's website, a lender can see the portfolio yield - the average interest rate + fees that a particular institution charges on loans (as Amy has just mentioned). Your comment is well-received and I will edit the paper to clarify that it is impossible for a lender to know a specific interest rate being charged on a loan, only an average. When I opened my original survey to Kiva's lending community, I received a lot of comments - both praise and criticism - and never heard of anyone not understanding what I meant by interest rates. One concern I did get, which I mention in my paper, is that nominal interest rates cannot be compared across countries and continents, where local economic climates are different. 20% a year could be fair in one country but not in another.

Let me know if you have any follow-up questions.

Cheers,
Ben

[pimschaaf]

Amy and Ben,

Thanks to you both for your explanatory notes! My questions have been answered to my satisfaction
I'll get back to you if any more questions come up.

Thanks again!
Pim