March 31st, 2007 — P2P Lending from Mike @ Prosperous Land
I’ve finally discovered the magic to extract all the listings from the XML data. My previous problems finding enough listings was due to user error. The CR-LF codes in the listing descriptions were messing up my parsing program. Quite maddening!
Now that I’ve got the extraction down, it’s time to rerun the matching algorithm.
Related StoresMarch 31st, 2007 — Investing from Sanjeev @ Idle ramblings of a wandering mind...
Where are Markets Headed?
It has been more than a month since that fateful Feb day when markets tanked and like many other, my dream year soured a little. Till then, in just 2 months of the current year, I had made (actually booked profits!) around 12%. Since then I have lost most of it - although for the year I am still positive. This is the time to make decisions - and here is my decision - I AM BUYING!! and here are my reasons:
1. First of all, I don’t mind too much when good stocks drop. How else are you ever going to get good opportunities to get into them! I am convinced that the stocks I have chosen are strong ones and I am going to stick with them till they recover - and because I am buying at every decline - when they finally recover I would have made a decent sum.
2. It takes conviction and patience to win long term in the market - and I am fully behind my stock picks. Fortunately my cash flow situation for the rest of the year is quite decent so I can afford to be patient and even put more cash into the market.
3. The current market weakness is mainly because of US economic slowdown, housing market worries and dollar value concerns. I have been aware of these risks and have focussed on creating a portfolio that includes quality developing world stocks and stocks with US stocks with significant international exposure. I am convinced that when the current market starts separating real risks with hidden gems, my picks will flourish. I am willing to wait till that happens.
4. Almost all my stocks are very reasonably valued (no Google for me!). These values give me confidence that there is a floor for them. Many of my stocks have forward PEs of low teens and even single digits. There is only so much that they can go down.
5. US Economy is in real danger of getting into a recession in near future. This will bleed the markets and there would be pain. I am sure that in spite of my quality portfolio - the pain will spread to me. But then - these are the best buying opportunities. I am willing to wait till the recession hits and leaves. Most recessions are less than 4-6 quarters - so a wait of 3 years to recover all my investments and get incremental returns on all my buying on the down ride. Not bad!!
My Portfolio
So now that I have professed my confidence in my portfolio - what is my current portfolio. Here are my main holdings. I am buying each of these stocks at every available opportunity: AMD, CAT, CX, FTE, HMC, IBN, SCSS, STX, TNE, TTM, TTMI and UL.
My Dream Stock
The one stock I am most excited about is Tata Motors (TTM). I have worked in this company, I have followed it for more than decade now - and I know this market inside out. And - in my opinion - the current PE of 13, with forward PE of 12 is a steal!! The current decline from 22 levels to 15-16 levels present an excellent buying opportunity and I am buying big time. A PEG of 0.66!!
TTM is the market leader in one of the fastest growing commercial vehicles market! It owns that market with more than two thirds market share with hardly any challenger in sight. TTM’s foray into the passenger car market was successful beyond expectation and TTM is now the third largest car maker in India. Now, the recent push to make the world’s cheapest car is going to thrust into a position of cost leadership all across the developing world. Look at this Forbes story (hosted on Rediff) for the magnitude and importance of this project. I am convinced that if anyone can pull off making a modern car for $2500 - TTM can. When this product finally hits market - TTM will skyrocket. On the other hand, even if that project fails, the commercial vehicle and mainstream car volumes are enough to justify current valuations. So - buy on.
From the Forbes article, here is a comparison of previous low cost leaders in automobiles:
Think about where the next big push in automobile sales volumes will come from - its not US Japan or Europe - these markets will likely contract in coming decade. The future of car market is in China, India and the rest of the developing world. This market is crying for a low cost car - and Tatas will give them one.
March 31st, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
The success of Prosper relies on the great awareness and integrity of consumers. It shall be platform with higher ethical and moral standard, beyond conventional financial institutions. The forum, part of Prosper community shall grant great freedom of speech to all interesting parties, without preference or meddling. Instead, it’s a pitty that Prosper has given great tolerance to some practices
Related StoresMarch 30th, 2007 — P2P Lending from Ramon @ Ramon's Kiva Blog
Looks like Kiva is having the flu… or, we all spent so much that all loans have been fulfilled!Anyways, let’s hope they’re back soon…Change the world one loan at a time - visit Kiva.org to find out how.
Related StoresMarch 29th, 2007 — Asimov, Conference Presentations, Research, Sci-Fi from Sanjeev @ Idle ramblings of a wandering mind...
Asimov - Science Fiction
Since I can remember I have been a fan of Asimov’s Science Fiction. The Foundation series is my absolute favorite. Asimov, however, was at his best when writing short stories. These short stories are “short” on length but incredibly complex and full of implications for matters as broad as religion, God, evolution and decline of civilization and so on… I consider “Nightfall” his second best work with an ending that takes your breath away - gives you goosebumps! But I reserve the title of best Asimov work ever to “The Last Question”. It packs such a powerful punch in just one sentence in the end that you keep pondering over it for long after you have read the story. Its so completely incredible and yet so feasible…
Now - some good soul has done us all a favor and put “The Last Question” online for all to read. If you have not read it as yet then you are in for a time of your life. Enjoy - here is the link.
I could not find an online version of “Nightfall”. If you know where I can find it - please do let me know.
Research Update
This year is turning out to be a great year. Another paper of mine titled “Collaboration Network Structure in Open Source Software Projects” has been accepted for presentation at the 5th AIS SIGSAND Symposium on Research in System Analysis and Design to held on May 12-13, 2007 in Tulsa, Oklahoma. Here is the abstract of the paper:
In this study, we view open source development teams as social collaboration networks of developers. By integrating theories and methods from social network, software engineering and organizational behavior studies, we examined the collaboration network structure of ongoing open source projects and the impact of the network structure on open source developer productivity. With development data from SourceForge.net, we found that open source developers, like their counterparts in traditional software development setting, have the tendency to use larger and less centralized collaboration network structure to tackle more difficult projects. However, such collaboration structure is associated with lower developer productivity. Our findings indicate that OSS practitioners still need to deliberately manage collaboration structure of the development teams to enhance productivity.
This research is co-authored with Ning Nan (University of Oklahoma) and Li Wang (Ross, Michigan). As usual, a copy of the paper is available on request.
Lastly, Thank you Miron for linking to my blog.
Related StoresMarch 29th, 2007 — Conference Presentations, Prosper, Research, Teaching from Sanjeev @ Idle ramblings of a wandering mind...
Today is turning into a pretty nice day. First, I checked the current copy of the SmartMoney, the magazine of the Wall Street Journal, and saw that it referred to my research on peer to peer financial marketplaces in one of the articles. Second, I heard back from the Academy of Management Conference and one of my papers have been accepted for presentation there.
The current issues of SmartMoney has an article on Prosper.com titled “The Banker Next Door” by Ann Kadet. She quotes my research in the article. I am quoting the article below:
As a whole, Prosper’s lender community is still more subject to irrational whims and emotional behavior than professional credit analysts. Sanjeev Kumar, a doctoral student at the University of Michigan’s Ross School of Business, analyzed six months of Prosper activity and found that quantitative data such as credit scores and borrower income explain just a third of bidding behavior. “Everything else is subjective, like whether there is a photo of the kids”, he says.
Here is the link to the original article: Banker Next Door.
Now the other good news. Academy of Management is the largest association of management researchers and professionals. The Annual Meeting of Academy is one of the largest gathering of management researchers. It would be a great experience to present in the Academy 2007 conference. The paper accepted is titled: Embedded Trust in Open Source Software Development Communities. Following is the abstract of the paper:
Structure of naturally evolving collaborative relationships in open source software (OSS) development communities has been identified as a critical factor in success of OSS projects. This study attempts to extend the literature by examining impacts of collaborative relationship structures on trust, an important yet under researched construct in the OSS context. Based on social network and organizational theories, this study proposes that collaboration network structures have significant effects on individual OSS developer’s trust in a project team. Subsequently, we expect that trust has positive effects on effectiveness of an OSS development community. Empirical analysis of project and survey data using partial least square (PLS) verifies that collaboration network structures significantly affect trust, which subsequently enhances OSS team effectiveness in terms of perceived software quality, team cohesiveness and satisfaction with the teamwork. Results of this study shed light on the antecedents and relevance of embedded trust in OSS communities with significant implications for both researchers and practitioners.
This year has started well - I attended the first conference of the year and my paper got accepted at the first paper submission of the year. I hope the luck is continue for the rest of the year as this is my job market year. Talking of jobs - I finally finished writing my academic Vita.
I also got the full student feedback for the course I taught in Spring 2006. Here is the feedback image from the evaluation website:
Quite Nice, Huh?
Continue reading → Research Mentioned in SmartMoney; Paper Accepted at Academy
March 29th, 2007 — P2P Lending, Prosper.com, p2p loans, peer-to-peer lending, peer-to-peer loans from Peer-Lend @ Peer-Lend.com
One of the most often misunderstood issues I see popping up on the official forums with some frequency is that of reinvestment risk. To be absolutely clear, the kind of “reinvestment risk” that I’m referring to here is that which is taken on when good borrowers make their payments or pay off their [...]
Related StoresMarch 28th, 2007 — , Prosper, Prosper Lenders, Prosper.com, prosper lending, prosper loan, prosper loans from nonattender @ Prosper Lending Resources
One of the most often misunderstood issues I see popping up on the official forums with some frequency is that of reinvestment risk. To be absolutely clear, the kind of “reinvestment risk” that I’m referring to here is that which is taken on when good…
Related StoresContinue reading → Notes on Prosper Lending: Reinvestment Risk
March 28th, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
After properly allocated fund for stated purpose, Prosper will make AUTOMATIC debit from your verified account to repay your Prosper loan for next 36 months. Most of the time, there are no problems with this. But, the first payment occasionally presents some problems. Many banks, in an effort to protect you, will decline a draw on your account from an unknown company.
To avoid this issue, I
Related StoresMarch 28th, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
Don’t think you will receive the fund next day once your listing fully funded. There are some additional verifications that Prosper does to protect lenders against fraud.
Bank Account Verification
Prosper will verify your bank account. It ensures drafts can be made against the account. Once your listing reaches 5% funding, you are able to initiate this verification. I strongly recommend you do
Related StoresMarch 28th, 2007 — Kristof from Matt Flannery @ Kiva Chronicles
I’m in NYC now. The reason I haven’t been blogging is because I’ve been writing a 30 page paper for an academic journal that is almost done. I’ve been writing 3 pages a night and it’s been intense!
We were in the NY Times yesterday. Nick Kristof wrote an interesting op-ed column that’s here.
This was a game changing moment for Kiva like the Frontline PBS moment in October. This time, our servers stayed up! Much props to Jeremy, Aaron, Zvi and MediaTemple. We did about $130K in loans and we were previously averaging $25K a day.
Nick just posted a blog entry that’s interesting about how microfinance works from the ground in Afghanistan. I’m going to take a risk and repost it here: Wow — I was blown away by the response on the Tuesday colum about Kiva (so were the people at Kiva!). Thanks to all who became newly-minted financiers, and let me try to address some of your questions.
Several people asked about terms and interest rates. In Kabul, the borrowers pay 2 percent per month. That sounds like a lot but it’s far less than money-lenders there charge. And of course some of that goes to inflation, so the real interest rate is lower.
The interest doesn’t go to you as a lender but go to the local organization, Ariana, that administers the process. It’s very important that these micro-lending groups become self-sustaining, and Ariana is expecting to become self-sustaining at an operational basis this year. That will enable it to expand much more broadly — and it’s far better to have interest-bearing lending that is self-sustaining than interest-free lending that requires subsidies and is thus limited. Right now Kiva is not allowed to pay interest to the lenders (under U.S. banking laws), but it is seeking permission to do so. Thus in the future you may find yourself getting a small amount of interest back as well.
A couple of people complained that I was taking a swipe at other aid groups when I mentioned that Kiva avoids bureaucratic layers. I didn’t mean to, for I’m a huge advocate of what aid groups do. In Darfur, groups like Doctors Without Borders, IRC, Care, ICRC, World Vision, AJWS, Islamic Relief, CRS and others do fabulous work. I’m a longtime sponsor of a child through Plan International, and I’ve seen their work on the ground. Ditto for Mercy Corps and many other aid groups.
But it is also true that the aid structure often involves top-down decisions, incredible bureaucracy and paperwork, and the dispatch of expensive American expatriates who have to drive around in SUV’s. Where possible I think it’s much better to support local groups rather than those expats. The locals cost much less than foreigners and they usually have a much better idea of what people need. So if Kiva can bypass expensive aid groups and lend directly to people who are screened (as in Afghanistan) only by groups like Ariana with an all-local staff, that really is a step forward.
One reader commented that micro-lending is not for the poorest but for the lower middle class, because the poorest don’t have the capacity to borrow. That’s just not true. In Afghanistan, Pakistan, Bangladesh and India, you routinely see the poorest and most vulnerable people (e.g. widows) borrowing $50 or so to buy goods from a wholesale market and sell them in a retail market for a mark-up.
Moreover, empowering women is an essential part of the micro-finance story, and you don’t find anybody more vulnerable than poor women in these societies. In Pakistan, I spent a day with Kashf Foundation (a superb micro-lending organization, run entirely by Pakistanis), and it was incredibly inspiring. The borrowers are often completely illiterate and barely able to buy food. And the stories are amazing.
One woman who had only had daughters told me that her husband had been about to get a second wife (on the theory that she would bear him a son) when she borrowed a bit of money from Kashf to start a small embroidery business in her home. The business prospered, and now her husband says he would never think of getting another wife. Another woman told me that whenever her husband beats her, she tells him that she’ll stop borrowing — and then he stops and goes off sulking, but doesn’t beat her.
Micro-finance isn’t a magic bullet. As readers know, I’m a big believer in medical interventions, such as fighting malaria and AIDS and maternal mortality. But it’s definitely a part of the solution.
Related StoresMarch 27th, 2007 — P2P Lending, Prosper.com, p2p loans, peer-to-peer lending, peer-to-peer loans from Peer-Lend @ Peer-Lend.com
Prosper.com uses a proprietary & predictive credit scoring model called Experian ScoreX PLUS(sm) to calculate borrower credit scores. Prosper then assigns a letter grade based upon specific score ranges.
While the score ranges may look similar to FICO(tm) scores, they are not FICO(tm) scores.
As ScoreX is a predictive model, the credit grade that borrowers are assigned [...]
March 27th, 2007 — , Prosper, Prosper Lenders, Prosper.com, prosper lending, prosper loans from nonattender @ Prosper Lending Resources
Prosper.com uses a proprietary & predictive credit scoring model called Experian ScoreX PLUS(sm) to calculate borrower credit scores. Prosper then assigns a letter grade based upon specific score ranges.While the score ranges may look similar to FICO(t…
Related StoresMarch 27th, 2007 — P2P Lending, Prosper.com, p2p loans, peer-to-peer lending, peer-to-peer loans from Peer-Lend @ Peer-Lend.com
Prosper loans are an entirely new asset class.
There is, quite simply, no (truly) analogous (or available) existing historical performance data to look to for guidance - even when it comes to lending purely “by the numbers”.
History is being made each day at Prosper.com - and the performance you see in your portfolio today will set [...]
March 26th, 2007 — , Prosper, Prosper Lenders, Prosper.com, prosper lending, prosper loan, prosper loans, prosperlenders.com from nonattender @ Prosper Lending Resources
Prosper loans are an entirely new asset class.There is, quite simply, no (truly) analogous (or available) existing historical performance data to look to for guidance - even when it comes to lending purely “by the numbers”.History is being made each da…
Related StoresContinue reading → Notes on Prosper Lending: Default Projections
March 26th, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
It’s great to see the one-hundredth Group loan has been originated one hour ago. The borrower who is an Iraq war disabled Army Captain and business owner of military-exclusive music label.
Sound Off
Related StoresMarch 26th, 2007 — Kiva, economy, kiva.org, latin america, microfinance, microfinancing, nicaragua, poverty, prisma from Ramon @ Ramon's Kiva Blog
As I have described over and again, my believe is that in order for a micro-entrepreneur to be successful, the business (and thereby inferred–the micro-loan) needs to fulfill several objective and subjective criteria. If they don’t, then the loan is n…
March 24th, 2007 — Group policy from Beyond_destiny @ Vets Helping Vets
We’ve advocated to Prosper for fair consideration of non-taxable income which is main source of income for many veterans. And we’re glad to receive a favorable announcement from Prosper today. Now, you are suggested to enter 125% of original amount of non-taxable income while listing a loan request. Please pay attention to following procedure if your income is eligible to be adjusted.
Prosper
Related StoresMarch 23rd, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
CommunityLend, Canada’s first P2P lending sits is set to launch in fall, 20o7. It could be likely the combination of Zopa and Prosper, the leading P2P lending site in U.K. and America respectively.
The team behind CommunityLend - which includes noted banking blogger Colin Henderson - is currently working on a preview site where prospective users will be able to simulate the social lending
Related StoresContinue reading → CommunityLend, Canada’s first P2P lending site
March 23rd, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
Occasionally, some members need to send a few pages of documents to Group Leader or Prosper for the purpose of verification. It could be inconvenient for many who don’t have a fax machine around and cost some bucks, too. I would like to recommend a free fax site, http://www.faxzero.com/ which my satisfaction is perfectly positive after several months experience.
FaxZero lets you send a fax to
Related StoresContinue reading → Sending Free Fax, It’s easy and convenient
March 20th, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
Feedback of VLO Program has been mixed since it was launched one week ago. The great leap seems not be good timing and incompatible with current condition of Prosper marketplace. Therefore, we’ve decided to take a small step, instead. Hopefully, VLO Program would march to its success step by step.
The category of Active Duty was selected for this experiment. We strongly believe it’s one of the
Related StoresMarch 20th, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
Prosper will ban defaulted borrower for life, regardless. It seems not be an alert to a few borrowers who have exhibited careless attitude towards their financial obligation of unsecured debt. Maybe it is easy to ignore a few calls and mails from collection agency, and walk away without threatening of home foreclosure and loss of transportation. However, the debt could have negative effect on
Related StoresMarch 19th, 2007 — General from tom @ Zopa
As a belated celebration of Zopa’s 2nd birthday, we’re holding a Member Meet-up on Thursday 22nd March - and we’d love for you to come!
It’s at The Village Hotel in Dudley, and there’ll be loads of the Zopa Team on hand (including James, Dave, Giles and Linda), as well as many Zopa members.
The evening starts [...]
March 17th, 2007 — Prosper, Research, Statistics from Sanjeev @ Idle ramblings of a wandering mind...
Continuing my data analysis pieces on Prosper.com (click here for all my posts regarding Prosper), I am looking at the group rating system in this post (using the more academic term - Group Reputation Systems).
Prosper introduced the rating system a few months back. Borrower’s have the option of being part of a group and groups are given a star rating (1 star to 5 star) based on the repaying history of past loans originated from the group. More details are available on Propser’s page. Now, the first thing which is clear to anyone with any experience lending on Prosper is that this group reputation system is broken - it does not work! In this post I will first provide “empirical evidence” (fancy research term for a statistically tested argument) that the group reputation system is not working and then I will discuss reasons why this is so and how can this be fixed.
Effectiveness of Prosper’s Group Reputation System
The essential idea is the groups will keep tabs on their member borrowers resulting in lower default rates for good groups. This will lead to lenders charging lower interest rates (lower risk premiums) for borrowers belonging to these better groups, providing incentives for borrowers to be part of these groups. A nice virtuous cycle. Now, lets look at some numbers and see if this cycle is in fact working:
The image below is a screenshot from Prosper of interest rates for last 30 days. Look at differences between interest rates for borrowers belonging to a group and those not.
As we expect, for most categories interest rates for group members are below those for non group members. This is good - the system is mostly working for the borrowers. However, there are many categories where the system breaks down and non members in fact get better rates (for example: AA for loans between 5K and 10K).
Now lets see if the system is working for lenders. I can’t divulge all the details here as its part of a research paper that is under review - but this is essentially what I did. I collected six months of listing information and the loan repayment information for all resulting loans. Then I analyzed this data to discover the factors that are antecedents of loan default - factors that drive loan default. The analysis was done using something called a duration model (also known as survival analysis). This statistical technique is widely used to model failure events where time to failure is known. Failure in our case is of course a loan default. Duration models output hazard ratio, which is an estimate of the relative risk of failure resulting from the factors included in the model. A hazard ratio greater than 1 would mean that the risk of failure increases with the factor. In my preliminary models the hazard ratio for group membership came out well above 1. This means that the risk of default is actually higher for borrowers that belong to a group! So as far as lenders are concerned - the group system completely does not work.
The duration model of loan defaults also uncovers some interesting results.
I will provide more details of this analysis as the paper passes through the review process and I finalize my dissertation.
Whats the Problem?
This is a topic for future post. There has been extensive academic research on reputation systems in past years - I will borrow from those and analyze Prosper’s reputation system in that light.
GMAT Preparation?
One of my long time friendshas started this wonderful online service to help students preparing for GMAT. Look up his site WinGMAT.com. I have looked through the contents of the site and they are good, quite good!
Related StoresMarch 17th, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
Group Loan Amount Reaches Half MillionWe’re pleased to annouce total amount of our group loans has reached half-million mark. We’re anticipating to reach one-million mark within year of 2007.Thank you for your continuous support.
Related StoresContinue reading → Group Loan Amount Reaches Half MillionWe’re please…
March 16th, 2007 — P2P Lending from Odyssey @ Craigslisters group on Prosper.com
(Copy this format and use it to create your new listing)Explanation of circumstances: Purpose of Loan: Occupation:Length of employment:Occupation 2:Length of employment: Current debts: 1) Account: Amount Current inter…
Related StoresMarch 15th, 2007 — P2P Lending from Beyond_destiny @ Vets Helping Vets
I have been contacted by many individuals who especially interested in lending to our honored veterans. Clearly, the social aspect of lending attracts many eyeballs.Personally, I wanna warn the interesting parties, particularly individual lenders who intended to use Prosper as an alternative investment method. Prosper (unsecured) loan was considered moderate high risk and illiquid investment as
Related StoresMarch 15th, 2007 — Kiva, economy, ecuador, kiva.org, latin america, loans, microfinance, microfinancing, poverty from Ramon @ Ramon's Kiva Blog
One of the advantages of investing into a local opportunity through Kiva is, that you, consciously or subconsciously, keep better track of what is going on in those countries in which you invested. And therefore, when things are happening in Ecuador, i…
Related StoresContinue reading → Soon to be Republica Bolivariana de Ecuador?
March 13th, 2007 — P2P Lending from Matt Flannery @ Kiva Chronicles
We recently found out that Kiva.org has received the Draper Richards Fellowship. This is a big step for Kiva as we move out of the scrappy startup phase to building an institution.
Premal and I have been in meetings with the folks at DRF since November. Draper prides itself as having one of the most thorough due diligence procedures in foundation community. The theory is that DRF takes the heavy burden of due diligence on early stage ventures so that other foundations don’t have to. It was, in every way, a group effort with a whole host of people getting our documents in order and vouching on our behalf. The fact that our org was growing so rapidly and producing results during the period made our jobs much easier. Thanks to everyone.
This is a first big step for Kiva.org into the foundation community. A step in this direction will help us move from the organic growth we are experiencing to more of a staged approach. You may remember, Kiva.org was cash-flow positive late last year and early this year based solely on "optional lender fees" from our website. With this grant, and hopefully others to come, we are able to move temporarily into the "cash-flow negative" realm as we focus on building for growth. The first half of this year will be all about building.
It was a pleasure getting to know Jenny Shilling Stein, Anne Marie Burgoyne and Bill Draper at the Foundation. They put us through a lot and got to know us better than most. Jenny will be joining our Board of Directors, thus bringing the gender breakdown of our board slightly closer to that of the entrepreneurs on our site (2 women on the board of 8, 2/3 women entrepreneurs on the site). Hopefully, the gender gap will continue to close:)
Bill Draper is a legend and we were quite star-struck in his office overlooking the Bay Bridge. The former head of the UNDP and archetypal Venture Capitalist asked pointed questions from the first minute I met him and honed in on the tensions in our model.
A poster hangs over his desk. "Dr. Yes", it says with a picture of him dressed as James Bond. The first time we met, he said "Yes" to Kiva. "Write these guys a check!" he exclaimed at that meeting. I had no idea what to think. It took three months to figure out if he was serious or not. Thankfully, he was.
Related StoresMarch 12th, 2007 — P2P Lending from Mike @ Prosperous Land
To get a reasonable loan to listing link-up, I had thought it’d simplify things to remove all the unfunded listings from the XML data to get down to the essentials. The two primary metrics I focused on were in the PercentFunded and AmountRemaining tags. I had assumed that if the PercentFunded was 1.0 or the AmountRemaining was 0.0, the listing had been funded. A few oddities popped up:
One loan (
March 12th, 2007 — P2P Lending from Mike @ Prosperous Land
A few web clippings from the last few days
Iinnovate has a podcast with Chris Larson, founder and CEO of Prosper.com
In this podcast, Chris chats with Julio and Min Li about Prosper’s innovative vision, its unique challenges as an eBay platform for money (check out Prosper’s cool tools for academics and researchers for performing case studies on its model), and the fine balance between the
Related StoresMarch 11th, 2007 — Conference Presentations, Investing, Prosper, Research from Sanjeev @ Idle ramblings of a wandering mind...
I have not posted anything here for a while as I have been busy trying to give shape to my dissertation. As part of my research I have been working with Lending, Borrowing and Loan Repayment Data at Prosper.com and there are some pretty neat results. I finished writing an article about my results and submitted it to one of the major Information Systems conferences AMCIS (Americas Conference on Information Systems) for review. I of course can not detail all the results here as it is under review, here is the abstract of the paper I submitted:
Peer to peer financial marketplaces provide a platform for individual lenders and borrowers to interact and transact. These marketplaces dis-intermediate the traditional financial services business models. In this exploratory paper we study the operation and effectiveness of one such marketplace: Prosper.com. We analyze six months of lender, borrower and loan repayment data to answer preliminary research questions about lender behavior, market effectiveness and antecedents of loan default. We show that lenders mostly behave rationally and charge appropriate risk premiums for antecedents of loan default. We also show that there are mismatches between risk premiums charged and relative importance of factors that drive loan default. We then explore the dynamic process of lenders adjusting their lending strategies to reduce these mismatches. Interestingly, our results indicate that the group reputation used in marketplace is not effective and needs to be enhanced. Our analysis provides a base for future research in this exciting and evolving context. Our results provide directions for practice applications as well as future research in design of financial marketplaces, investing and risk mitigation strategies and improving effectiveness of financial marketplaces.
I am excited about my research on Prosper.com (or Peer to Peer Financial Marketplaces - the name I have given to the broader phenomenon). I am continuing to enhance my analysis and looking for improving my paper and submitting to a top journal. If you would like to read a copy of my paper then pls drop a comment with your email and I will send one to you.
It seems my research will be quoted in the SmartMoney Magazine. Ann Kadet, who is a columnist and Senior Editor with the magazine got in touch with me about my research on Prosper.com. The coming issue of SmartMoney will have an article on Prosper.com and according to Ann, there will be a mention of my work. Cool…
Portfolio Update
Like everyone else, my stock portfolio also took a hit in last two weeks with the sharp decline in US markets. Although, I continue to believe that in the medium term stocks are worth keeping - so I used the drop to add to my holdings and I have now mostly recovered. My current major holdings are (in order of size of holding): STX, AMD, TTM, TNE, UL, FTE, SCSS, CX, CAT, IBN, TTMI, HMC and TKC. As you can see - I have diversified considerably - I now have large technology MNCs, Indian Auto, Brazilian Telecom, Mexican Cement, Consumer Goods, Global Auto, Turkish Telecom and some good old US companies in my portfolio… Before the Feb end decline, I had booked profits to the tune of some 16% return - not bad for a two month period.
Research Update
Since I wrote last one of my papers was nominated for the best paper award at HICSS 2007 (Hawaii International Conference on Systems Sciences). The paper is available here. I have further improved this paper and it is now going to be a part of my dissertation.
Related StoresMarch 6th, 2007 — P2P Lending from Mike @ Prosperous Land
Following up on my previous post, it looks like there’s been some resolution on the HistoricalInterestRateTable XML tag field. From the Prosper Forums, Dzogchen noted that the data looked suspiciously like the 30-day average rate for lenders.
Armed with this suggestion, I went back into the XML data and managed to calculate the historical interest rate table using loan listings less than 30 days
Related StoresMarch 3rd, 2007 — Kiva, kiva.org, microfinance, microfinancing, peru from Ramon @ Ramon's Kiva Blog
As I must have told all of the 3 people that read this blog on an (ir)regular basis, for the last few months I have been trying to get something going between Kiva and Peruvian MFIs. My report on what I did while I was out there last month, has been lo…
Related StoresMarch 3rd, 2007 — P2P Lending from Mike @ Prosperous Land
RateLadder had posted a note that Prosper has exceeded $40 Million in loans (go Prosper) when they did posted the Marketplace data. This lead to an interesting question: does the historical interest rate information reflect borrower rates or lender rates? This matters because it tells whether groups are lowering the borrower’s interest rate (as Prosper intends) or merely redistributing the
Related StoresContinue reading → How Is Historical Interest Rate Data Calculated?
March 3rd, 2007 — Kiva, microfinance, microfinancing, peru from Ramon @ Ramon's Kiva Blog
Recently, Perú’s president Alan Garcia launched a campaign called “La Hora Sin Demora”(time without delay) against a perceived endemic national (or even transnational) problem: tardiness. Although campaigns like this appear to be popular in Perú, I d…
Related StoresContinue reading → National Tardiness Campaign: will it work?
March 2nd, 2007 — Kiva, economy, ecuador, latin america, loans, microfinancing, poverty from Ramon @ Ramon's Kiva Blog
I just invested my bimonthly installment of $25 into a cattle and rice farm called Hacienda la Maria, owned by Ivan Romero in Ecuador. What made this one stand apart from all others?First, I should say that I am overinvested in Ecuador. Initially, I th…
Related StoresContinue reading → What convinced me to make my latest Kiva.Org loan
March 1st, 2007 — books, economy, literature, peru from Ramon @ Ramon's Kiva Blog
As should be well-known by now, I’m turning a bit into a Perú-o-phile or whatever you want to call it. As a result, I have been reading books about this country, both fiction and non-fiction. There is one writer you really cannot get around: Mario Var…
Related StoresMarch 1st, 2007 — microfinance, peru, poverty from Ramon @ Ramon's Kiva Blog
Our trip to Perú made painfully clear what I already knew, but it is always good to put things to the front of the mind.Many times, developing countries are defined by their gap between rich and poor. While this gap is real and existent, it’s by no me…
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