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A comment on Show HN: Dharma – Programmable Peer-To-Peer Loans Using Ethereum Smart Contracts. Parent comment

Re:Show HN: Dharma – Programmable Peer-To-Peer Loans Using E... by nahollander on Tuesday July 25, 2017 @04:44PM (#14851688)
Exactly. Tala's a great analogy insofar as developing world microfinance faces a lot of same challenges Dharma will likely encounter -- namely the lack the of legal recourse for defaults.
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Re:Show HN: Dharma – Programmable Peer-To-Peer Loans Using E... by nissimk on Tuesday July 25, 2017 @06:56PM (#14852563)
I heard a guy talking on Bloomberg radio this morning about this in regards to emerging markets bond investing. The interviewer was commenting that the legal system didn't provide good recourse in the event of default. The guy said like you that the credit analyst would need to focus more on the likelihood of default than the recoverability of the collateral.

It reminded me of my time working on credit models for subprime mortgages. We forecasted 2 variables: frequency and severity of default. The total loss prediction was the product of the two. If your severity is always 100% at least it makes your model simpler.

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