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After that lenders select preferred borrowers from

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collecting loan information from borrowers and putting it on the online page. After that, lenders select preferred borrowers from the site based on the uploaded data and send the money to Kiva, which disburses the funds to its partners so that they pay the loanees. The process indicates that people with huge credit scores receive loans more easily compared to those with low scores. Kiva faces a number of asymmetric information just like any other financial institution. They include moral hazard, adverse selection, and principle agent. Primarily, this paper explores the moral hazard between the Kiva website and their partners. For instance, when the partners acquire micro finance loans from Kiva, they are likely to invest the money into other ventures other than ensuring the funds reach the poor. In such cases, the probability of the partners’ moral hazard will be increased. Furthermore, the partners may fail to act on due diligence and give loans to people with a low credit score. In the veritable position, these negative factors pose a potential risk to the systems’ operations. Hence, to ensure these issues do not occur, Kiva has assessed the due diligence of its
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MICROFINANCE LOANS 3 partners to guarantee the safety of loan capitals. The organization has also collaborated with local
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