Comment by jnmandal | Hacker News Reader

Comment by jnmandal | Hacker News Reader

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A lot of the overhead from 'traditional' microfinance (the model popularized by Mohammed Yunus in the 70's-80s) comes from creating social/community-based incentives for repayment, referred to as social capital. This is considered the alternative to regular loans since in non-collateral lending the borrower loses nothing monetarily if they don't repay.

According to their site, the repayment rate for Zidisha is under 50%... thats pretty dismal in an industry where you normally consider a healthy MFI (microfinance institution) to be operating at high 90 percentiles of repayment.

Where do you get "under 50%"?

If you're looking at https://www.zidisha.org/statistics, you might be confused by

  Principal repaid: $607,262 (44.9% of amount disbursed)

This is for all loans made within the last year, many of which are very recent. You should add the line

  Principal held by borrowers repaying on time: $581,565 (43.0% of amount disbursed)

to get 87.9% either repaid or in good standing.

Ah, I stand corrected.

Our repayment rate is currently in the 85 - 90% range. We also have a reserve fund service, which compensates lenders for loan defaults.

hypothetically: if the traditional overhead is very expensive, a 50% repayment rate might still be more profitable.

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