We’re thrilled to announce an innovative partnership between Kiva Labs, Innovations for Poverty Action (IPA), Google.org and two Kiva Field Partners to evaluate the effect of product design changes on the welfare of micro-entrepreneurs and on the viability of microfinance institutions.
 
Through this study, Kiva aims to push the boundaries of microfinance by helping its MFI partners provide the poor with more affordable, more flexible credit. Simultaneously, IPA will conduct a randomized controlled trial (RCT) to evaluate the real impact of these loan products on borrowers’ lives. Most loan products currently available to the poor tend to be rigidly structured, with fixed payment dates that don’t always align with borrowers’ diverse business types, cash flows or investment needs. This initiative will evaluate the impact of more flexible and lower interest rate loan products on the types of investments made by micro-entrepreneurs and their subsequent economic outcomes. Borrowers who receive flexible loans will have the option to skip several monthly payments of their choosing, which could allow them to make higher-risk, higher-reward investments. 
A borrower from Kiva Field Partner FMSD
 
Kiva Field Partners Emprender (Bolivia) and Fundación Mario Santo Domingo (Colombia) have elected to participate in the initial pilot of this study, and have already conducted extensive market evaluations and promotion with potential borrowers. Over the next couple of months, these new loans will appear on Kiva for our lenders to fund! Because these products are being tested for the first time and are potentially riskier than a standard microfinance loan, Kiva’s 0% interest, risk-tolerant funding is particularly important.
 
We’re excited to see this project take off, and look forward to sharing results with our lenders once the study is complete!
 
 
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