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adventures in Mongolia

Loan expirations on Kiva

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Suzy Marinkovich, a Kiva fellow in Bolivia, wrote a post on loan expirations recently, questioning the ethics of the Kiva website functioning like a marketplace.

Here’s my response:

i’ve been thinking about loan expirations for awhile as well.

i personally don’t have an issue with the marketplace concept because kiva is exactly that. lenders get to choose individual borrowers they want to lend to, and choice will always involve personal biases. however, that freedom to choose is what makes kiva so successful – lenders feel empowered. if we were to remove allowance for biases – then kiva could just post borrower stories, but have lenders lend to a common pool instead of a specific borrower. but that, though more equitable, will unfortunately generate less lender interest, and ultimately less funding.

to the borrower however, it isn’t much of a problem since they will get funding anyway. having the MFI improve/refine their content to be more attractive to lenders is not a bad thing – since that will generate more lender activity on kiva and more funding in the long term (not a zero sum game). and whether or not they have integrity in improving their borrower profiles (i.e. not embellishing or making stuff up) is out of our hands

however, what I do have issue with is if an MFI has a kiva specific product. my MFI, XacBank, in Mongolia has exactly that (i think it’s the only MFI right now). but basically, kiva’s 0% interest rate allows my MFI to return 9% of interest paid to the borrower at the end of the loan term. but since my MFI pre-disburses the loan before getting fully funded on kiva, they’re essentially promising the borrower a certain product (9% int back) but are not absolutely guaranteed that they will get kiva funding (0% interest) for it.

so far none of our loans have expired w/o getting funded, but i’ve asked my kiva coordinator what will happen if it does happen. she said, she will just repost the loan the next month. i then asked – what happens if the loan was disbursed more than 30 days before the new reposting since that’s not allowed (i think this will be the case since loans are on the site for 30 days), she said she might try asking kiva to make an exception. i don’t think that will happen though. what i think will happen is that a) my MFI will have to tell the borrower that they can’t get the 9% back even though they’ve already taken out a loan, or b) fund that borrower’s 9% interest back themselves. option b) isn’t that big of an issue if they have to cover just a few borrowers each month, but if too many loans start expiring before getting funded, my MFI may have to stop offering a kiva-specific product due to the volatility of funding. (which isn’t what any of us want!)

so i guess the takeaway here is – as kiva continues to scale up, it needs to properly manage and regulate the amount of credit it is extending to MFIs, such that supply (of loans posted) never exceeds demand by too much, and hence keeps the % of loans expired at a low constant.


will write about my last 2 days soon! think: bizarre.

p.s. only after posting do i realize automatic ping / linkbacks occur. wth!

Written by j

October 31, 2009 at 1:37 pm

Posted in Kiva

excerpts pertaining to M

with 3 comments

notable quotes from recent reads…

Ulaanbaatar is possibly the coldest capital city in the world.

– Michael Kohn, Lonely Planet Mongolia, p14

as a testament to the point above, it snowed on wednesday for the first time since summer… and it’s only early october.

The Mongols loved competitions of all sorts, and they organized debates among rival religions the same way they organized wrestling matches… Their debate ranged back and forth… No side seemed to convince the other of anything. Finally, as the effects of the alcohol became stronger, the Christians gave up trying to persuade anyone with logical arguments, and resorted to singing. The Muslims, who did not sing, responded by loudly reciting the Koran in an effort to drown out the Christians, and the Buddhists retreated into silent meditation. At the end of the debate, unable to convert or kill one another, they concluded the way most Mongol celebrations concluded, with everyone simply too drunk to continue.

– Jack Weatherford, Genghis Khan and the Making of the Modern World, p172-173

absolutely hilarious stuff.

Mongolians are lazy and (insert negative adjective that i’ve forgotten). Would you describe yourself as so?

– Mongolian Airlines In-flight Magazine, Interview question for J. O- a prominent Mongolian businesswoman

WOW. all I can safely say is that Mongolians are extremely candid.


Why have economists remained silent while banks rejected the poor as unworthy of credit? Nobody can provide a convincing answer. Because of this silence and indifference, banks have imposed a financial apartheid and gotten away with it. If economists would only recognize the powerful socioeconomic implications of credit, they might recognize the need to promote credit as a human right.

– Muhammad Yunus, Banker to the Poor, p150

go kiva.

Written by j

October 16, 2009 at 5:47 pm

Posted in Mongolia

the place between Russia and China

with 4 comments

here’s where i’m at: Map of Mongolia i wanted to write a before and after just so you can hear my drawn breath of anticipation / trepidation in between…

before: 9:30am EST on Friday, Oct 9th i realize no one knows a lot about Mongolia… therefore i can make up absolutely anything and people will believe me. haha case in point. (some of the following are actually true)

  1. there is a mongolian mythical creature called the Mongolian Death Worm which is purportedly found in the Gobi Desert, grows up to 5 ft long, and spews sulfuric acid which makes it deadly to men
  2. Genghis Khan’s father wasn’t his mother’s first husband
  3. mongolians historically have been nomads, and hence do not farm; therefore amongst many other things their vegetables are made-in-china
  4. there is another mongolian mythical creature in the Kharyagas lake which is roughly equivalent to the Loch Ness Monster in Scotland
  5. there is a Louis Vuitton store in the capital
  6. there still exists barter trade in Mongolia. I am for instance, trying to use 24 cans of xxx as currency. (am not revealing exactly what because i don’t want it to devalue. j/k)

turning to more mundane matters, in the next 35 hours starting at 4:30pm EST i will take 3 flights, have 2 layovers, be in 4 airports (Boston>LA>Seoul>Mongolia), before arriving in Ulaanbataar. hopefully it’ll go like clockwork.

after: roughly 3pm on Sunday, October 11th (Mongolian time is exactly 12 hours ahead of EST)

Landing in Ulaanbaatar, Mongolia

time to be a Kiva fellow.

Written by j

October 13, 2009 at 5:16 am

Posted in Mongolia