Prosocial Crowdlending in Kenya

38 Pages Posted: 17 May 2017

See all articles by Alberto Ibarra

Alberto Ibarra

Universidad Panamericana - IPADE Business School

Natàlia Cugueró-Escofet

University of Navarra, IESE Business School

Miguel Angel Canela

University of Barcelona - Faculty of Mathematics

Date Written: May 17, 2017

Abstract

The crowdfunding industry has emerged in the past few years as one of the most promising alternative financing options. Lending and donating operations accounted for 81% of the crowdfunding industry's $34.4 billion total funding volume in 2015.

Kiva Zip, a prosocial program, created an online platform that provides 0% interest peer-to-peer loans and has features in common with lending and donating crowdfunding platforms. This program is a spin-off of Kiva. Although both platforms have a similar objective and modus operandi, they differ primarily because Kiva has a figure called a field partner, who is the intermediary between borrowers and lenders, while Kiva Zip has no field partners but does have so-called trustees, who provide support to borrowers but do not act as intermediaries for resources or charge for their services.

The authors thoroughly analyzed Kiva Zip's operations in Kenya for the years from 2011 to 2015. Kiva Zip has stopped posting new campaigns in Kenya but has continued to collect payment for previously delivered loans. We studied in detail the impact that lenders, borrowers and trustees had on the platform's performance. In addition, we analyzed the different stages of a campaign on Kiva Zip: when a campaign is posted, when it is funded and when the loan is paid back.

Keywords: Crowdfunding; Crowdlending; peer-to-peer; Kenya; Africa; Funding; Entrepreneurship

JEL Classification: M1

Suggested Citation

Ibarra, Alberto and Cugueró-Escofet, Natàlia and Canela, Miguel Angel, Prosocial Crowdlending in Kenya (May 17, 2017). IESE Business School Working Paper No. 1166-E, Available at SSRN: https://ssrn.com/abstract=2969750 or http://dx.doi.org/10.2139/ssrn.2969750

Alberto Ibarra

Universidad Panamericana - IPADE Business School ( email )

Floresta 20
Mexico City, 02080
Mexico

Natàlia Cugueró-Escofet

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Miguel Angel Canela (Contact Author)

University of Barcelona - Faculty of Mathematics ( email )

Barcelona, 08007
Spain

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