Is chasing expiring loans a good strategy?

Discussion in 'Kiva | Loans That Change Lives' started by milchap, Jul 5, 2012.  |  Print Topic

  1. milchap
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    milchap Gold Member

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    I just got back from a long walk and I usually do some productive pondering while meandering the neighbourhood.
    This post is to share with you this am ponderings.....hoping to engage the community in problem solving on the open marketplace chaos and the resulting expiring loans,

    My question is: is chasing expiring loans a short term solution or is it contributing to the problem?

    Some MFIs keep posting loans with the hope that the generous Kiva community will step up to the plate. The community backstops some loans and the cycle continues. I am getting hard nosed and believe that until the MFIs feel a cash crunch they will repeat the cycle. So perhaps chasing an expiring loan is being co-dependent and unknowingly contributing to the problem,

    Kiva is content when loans get funded. Chasing expiring loans masks the extent of the glut and hides the blatant flaws of the open marketplace ......and again perhaps we are unwittingly contributing to the continuation of business as usual by chasing expiring loans.

    The question is: is letting the chips fall and experience the full impact of the Kiva open marketplace strategy a good tactic? Such a tactic would perhaps be sobering to the MFIs and
    to Kiva HQ

    Note: A group of MPKLT members have been quite vocal about the present direction charted by Kiva. It is to be noted that these same members are extremely passionate about microlending and the Kiva microlending brand. Their questions are to be interpreted as expressions of firm belief in the mission of Kiva hence the strong advocacy in the hope that it fosters a fruitful dialogue in the Kiva community.
     
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  2. dgilks

    dgilks Silver Member

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    I think it depends in whether expiring loans are being funded with new money or old. If new money comes in to find the expiring loans on top of what was otherwise coming in then, in some ways, that is a success. If it is solely the redirection of funds away from those people really want to fund but they feel like they have to fund then that is clearly not a good thing.

    I can see the value in letting the cash crunch hit but I can only see it impacting the borrowers who need funds, particularly in the short run, and that puts me off ceasing the expiry chase.
     
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  3. milchap
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    milchap Gold Member

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    In my situation chasing loans would be the redirection of repayments coming in.....
     
  4. jbcarioca
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    jbcarioca Gold Member

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    This is a wise thread, milchap. We do need to decide, each of us, how we want to deal with this crisis. My own record of success in this respect has been horrible. Until the Open Marketplace (OM), Barefoot and Strathmore began I had had only a half dozen expiries. Since those events I have had 1030 loans expire. The last loan I made on July 4, Samnieng (#433854), expired less than an hour ago.
    On July 4 I made 133 loans
    Of that number 101 expired unfunded
    33 of them were funded.

    I cannot express my feelings without the use of profanity. This result I'll post on a couple other places, but I will try hard to refrain from further comments on this subject. Will I succeed? Probably not.

    If my intentions hold those will be my last effort to chase expiries.
     
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  5. SC Flier
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    SC Flier Gold Member

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    I think that it's foolish to chase some expiring loans. And I think that it is foolish to think it would be reasonable for all loans to get filled through Kiva. I don't feel frustration that some loans go unfunded; the frustration comes where there is a very reasonable loan* that slipped through the cracks while much less reasonable loans got funded instead. It is a mystery why some loans do not get funded. But it seems like Kiva could do more to help bring these to the forefront for those who have money to lend.

    I find the default ranking by "Popularity" to be a bit unfair or unhelpful. I also find the "Expiring Soon" ranking to be a bit unhelpful because there is not much sense of hope for filling some of those loans. (For example, why would anyone add a small loan to this cowboy lawyer that needs $1275 in less than 4 hours but has had no lenders at all yet? Or is the "lawyer" part the problem?) Seriously, I think that some alternate formulas could do more to help. That the "Expiring Soon" sort option exists at all leads one to believe that Kiva thinks that it is important.

    Here in milepoint, our team members clearly have some other formulas in their heads which they apply when trying to work out a new proposal for who our team could try to target next. For example, $$$ per hour remaining before expiration + other lenders are not all busy setting off fireworks or sleeping + we think that enough other lenders exist with money to lend + the borrower's purpose is satisfying to the lenders + other variables. (This formula in action: America needs $200 in next 11 hours, it's a normal day in the US, I like cheese, and I came across America's loan yesterday on the USA's Independence Day.)

    It's unreasonable for us to tackle all of these as a team, though, and it could even hurt our team to try to do so. It's also unreasonable to think that enough of our team members have and are willing to commit enough money for daily contributions to such a fight.

    I sort of get the idea that the focus on expiring loans has come about as some lenders have sought more purpose in their lending strategy. If risk of expiration were not even presented as a factor, what strategy would you use instead to select your borrowers? Would it be as rewarding to you as a lender? Or is the quest to save loans from expiring an attempt to gain additional satisfaction in the quest for good?

    *reasonable loan = A loan which would normally appeal to most lenders because of relatively low risks, short repayment terms, and favorable social impacts. A subjective classification.
     
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  6. SC Flier
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    SC Flier Gold Member

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    jbcarioca,
    Without meaning to sound disrespectful, I thought your strategy yesterday seemed to be for a self-fulfilling prophecy. You loaned to many borrowers that by that point had no chance even with your help. You loaned to them anyway. What points did it prove?
     
  7. jbcarioca
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    jbcarioca Gold Member

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    Cross posted with the LLL thread;

    Well... I have just left a phone call with Premal, which will continued shortly. There is no question in my mind that this team and others have captured full attention from Kiva management. There is also no question in my mind that they will make changes as soon as they figure out just what, at this juncture, is best for them to do.

    Depending on the out come fo those deliberations at Kiva I may be changing my tune quickly. I hope so.

    We all need to make a strong case for exactly what we want Kiva to do and why. Thanks to Jouko and the rest of us on the Expired Loans team, plus the agitators here at MilePoint their attention is very clear. Now, what do we want them to do?

    If the attention results in actual change I will end out changing my resolve. Hopefully that will be the case. However, they do have to demonstrate action as well as kind words. I hope they will.

    There are many influential people who do not share our views. If we want Kiva to change in the ways we want them to we must have convincing and cogent arguments about exactly what we think they should do and how to do it. Just saying "NO to the Open Marketplace" is not enough. We need to describe how they should approach rules for posting loans, expiry, conditions for unusual loan types and so on.

    I hope we can discuss these topics now. We have their attention!
     
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  8. Toula
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    Toula Gold Member

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    I try to stay true to my principles when I decide on my loans. I do not strictly chase a loan just because it is expiring, it just seems that the loans I prefer are those of the expiring type. I have a total love affair with the Tajikistan loans, however I have tried to adopt a different strategy. If I see one that has a bit of momentum or a recently loaded loan that might have legs I try and jump on it early to avoid the expiry process.

    I do feel sorry for those loans that are caught in the backwash of the loading of Barefoot or Strathmore loans. I am frustrated by all the talk of what these MFIs have to do to make their loans more appealing. How can they compete with the current 2 for 1 promos for Youth Arab and USA loans?

    That said I have no interest in loaning to someone so they can buy some bedroom furniture and I'd be surprised if too many other lenders are going to stretch themselves for the same purpose.

    I do wish they would reveal who the lenders are that have been piling on the loans. My suspicion is Philippines (which is why they suddenly have expiries), El Salvador and Ecuador have had growing numbers with not a big enough support base in the US to carry them thru.

    All I know is I feel myself disconnecting from Kiva. The notification that I transact too often on Paypal and they were going to send me checks means I will add no further funds to my Kiva account. The games that are being played to get loans funded, ie. taking all popular loans to a basket to get your own loan funded, that then creates problems for those other loans which may end up on the expiry list. The attitude of Kiva to we don't really care about what you are saying. I do wonder if some of the MFIs are going to pull right back. Armenia took a big beating this last week with expiries and they now only have 5 loans on site. Even Kosovo and Timor loans are taking longer to fund because they are no longer a novelty.
     
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  9. tondoleo
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    tondoleo Gold Member

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    Great. You are going all Evelyn Mulwray on us. I told you to wear your Panama hat in the sun.
     
  10. Toula
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    Toula Gold Member

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    I think one of the key things they have to get into place is the loading of loans onto the site. If a MFI reaches their limits loans must not be bulk loaded on the first day of the next month.
     
  11. milchap
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    milchap Gold Member

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    Thanks for the update. I am very happy that our plea for change has been heard.
    ....Now to craft a strategy that is win win and is acceptable to all.
    Thanks JBC for hanging in there and continuing to push for change.
     
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  12. tondoleo
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    tondoleo Gold Member

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    I am going to wait and see what change is actually effected before entering the lending arena again. Good luck to all.
     
  13. milchap
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    milchap Gold Member

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    I agree....the jury is out....however the judge is pondering a ruling on the objection.....and that is positive.
     
  14. jbcarioca
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    jbcarioca Gold Member

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    Very well said.

    You do not need to worry about being disrespectful. You will not make this into TOBB by pointing out my foibles.

    My reason for doing that was that since I have been lending at Kiva I have followed groups like LLL whose goals I thought laudable; to help ensure that loans coming near to expiry would be funded if possible. Before the Open Marketplace those were almost always men with longer tenors and larger loans, often for vehicles, industrial or agricultural equipment and located in the Middle East or the 'stans. The problems were clear and it was a joy to help get those loans funded.

    Once the onslaught of expiries from everywhere came in, coupled with diversification into very large loans for attractive topics crowding out began.

    When there were so many expiring loans on the 4th of July and such dramatic lack of funding for traditionally attractive loans I decided to try something different. Was it too late? A year ago we were regularly funding loans during their last week on the board, often when they entered the last week with no lenders at all. Even recently we've funded many loans during the grace period. That has been overwhelmed.

    So, my effort was to show this forcefully and dramatically. Was that wise? I do not know. I do know that many of us have reached the point that either the circumstances must change or we take our eleemosynary funds elsewhere.

    Kiva is now paying very close attention to Expiring Loans (Premal even joined the team) and to us, so it is not unreasonable to think all this agitation may actually have positive results. Could positive results happen without such agitation? The record so far suggests not.
     
  15. jbcarioca
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    jbcarioca Gold Member

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    Where is Jake Gittes when we need him?
     
  16. tondoleo
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    tondoleo Gold Member

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    Always follow the water flow.

    jack.jpg
     
  17. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    I have been wondering the same thing even as I jump on most of the loans proposed in the other thread to build up a loan portfolio from scratch. All my loans are funded with new money since I haven't had any repayments yet. Which also means I have very little information for historic comparison. I think I would very quickly get frustrated and demotivated if I kept picking loans purely based on what might be my ideal criteria just to see them then expire days or weeks later. By jumping on the "save this loan" suggestions the number of expired (=unsaved) loans in my portfolio has been fairly small so far. On the other hand, looking at the loan search page sorted by expiration date is a rather depressing thing.

    If this was just a game or scientific lab study, I'd be all for "experimenting" with the open marketplace strategy to see how it works out in practice. But we're ultimately playing games here with the livelihood and future of real people (not directly the ones who see their loans expire since they'll have been pre-funded, but others like them). So as a newbie I am trying to learn from those who have been "in this game" for much longer, and I follow these discussions with great interest.
     
  18. harvson3

    harvson3 Silver Member

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    I only help expiring loans when I can, and I'm hard-pressed to see how a deliberate, coordinated action that would raise the expiration rate from 15% to 20% would work. Kiva already knows, presumably, that we're upset.

    My worthless two cents/inane suggestions/ramblings:

    1. Kiva needs to bring the volume down. I'm very worried that letting such a high volume of loans go unfunded is going to hurt MFIs and borrowers. I think telling MFIs to redo their calendars is misguided. Outside of repayment week,I imagine, the volume of new money, either reloaned or added as credit, falls to a low. Telling MFIs to post better pictures or descriptions might be nice, but it does nothing if the money just isn't there.

    I don't propose that we have to go back to the days when you logged into Kiva and there were no loans available because it was a weekend and everything had been funded. But there must be a compromise level where fewer loans fail. If it means slower growth for Kiva, so be it.

    2. I'll join the chorus in favor of caps on Accion and Barefoot Power too. I feel that they're stepping on the toes of multiple borrowers who need the money more. Ugh.

    3. I'm not terribly concerned about the speed of getting things translated. A link to Google Translate would help, but I don't know that people decline to lend because the project description is in French. A wiki open to log-ins might help, insofar as most people can't deliver translations on a regular basis. I can't do so, but I could log-in every once in a while and knock some pending translations out for the languages I know.

    4. (off-topic) I liked the SMD raffle, and would suggest that next time the requirements be a little steeper. One $25 loan seems very little for such a hot ticket, especially because people are bidding on a ticket to a $1000+ party, and they'll probably get their money back. Perhaps four loans, or five loans, or a month of participation. (Don't take this as sour grapes; I have no interest in, time for, or money for the DO.)

    5. I appreciate jbcarioca getting in touch with Premal about these issues. Has anyone reached out to Good Dogg to get his/her/their thoughts? As far as I can tell, he/she/they is/are the most active and largest volume Kiva lender out there, and probably would have powers of persuasion in talking with Kiva.
     
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  19. jbcarioca
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    jbcarioca Gold Member

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    Thanks.

    I strongly suspect Good Dogg's views have been coming across very clearly. So have a number of other major lenders. Not everyone sees the same issues, but I am sure everyone is concerned..
     
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  20. milchap
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    milchap Gold Member

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    Can we all agree that the number of expiring loans is a serious problem and needs to be addressed by Kiva with the help of teams concerned by the situation?
     
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  21. misman
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    misman Gold Member

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    I suspect that people see the Barefoot (and perhaps the Strathmore) loans as being secure because they are so large and are associated with a what appears to be a large company. The sky will fall if they default out just like Accion does.
     
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  22. MissBurrill
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    MissBurrill Gold Member

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    I've been thinking about expiring loans and pondering boosting my loan stats by targeting loans likely to expire. I could recycle $25 and see how many loans I can have credited to me. There's nothing illegal about it but it just feels wrong to me. Maybe it's like a game of Russian Roulette but I really don't want to sit around hoping loans fail.
     
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  23. iolaire
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    iolaire Gold Member

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    I'll give you something small, like five single use GoGo passes, if you are able to boost your loan count by 1,000 loans (or even 500). I've thought about doing the same but am worried that it would be a waste of time just to make a point.
     
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  24. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    There's probably a reason for it, but I don't understand why the stats count expired loans the same as successful loans. Leaving aside the aspect of making ones' stats look better, they give me the wrong data when I look at my stats to see what I have accomplished.
     
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  25. MissBurrill
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    MissBurrill Gold Member

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    I have no idea what a GoGo pass is but ok, I will see what I can do. Any chance you can find me one likely to expire? I'm at work doing data entry.
     
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