Studies of Life

Learning by doing.

Is Bondora trying to hide data?

22 May 2015 by Jim

Bondora recently introduced a few new graphs and statistics that they say are based on investor feedback. While I welcome additional data to look at, I have to say that one of the new charts offered is so hopelessly obscure that it might as well not be there at all. I’m talking about the graph below, available on the statistics page on the tab for “Risk Segments”.

What makes this chart so problematic in my opinion, you ask?

Well, first, it is supposed to give us information about actual recovery rates. So the Y-axis (the vertical one) should be a percentage of recovery, i.e. if 50 EUR of a loan with 100 EUR overdue principal were recovered, it should say 50%, right? Wrong. The chart shows the how much of the expected recovery ratio was actually reached, not how much was recovered.

For example, if Bondora expects HR loans to have a 20% recovery, and they actually had a 30% recovery, the chart would show 150% in this case, because 30 is 150% of 20. So the only thing that this chart shows is how close the loan recovery is to what Bondora expects it to be, without any information on what these expected rates actually are, nor what the actual rates are. The chart basically says: ‘We won’t tell you how well recovery works, but how good we are at expecting how well it works.’

Then there’s the logarithmic Y-axis…

Another (although minor) issue I have here is that the Y-axis uses a logarithmic scale, i.e. 0-10 is the same distance as 10-100, 100-1000, etc. That makes the chart less clear for those who are not majorly into statistics and charting.

So, to sum up, it seems in this case Bondora chose to manipulate a chart to hide data while pretending to be more transparent. In recent months, several changes of the website’s interface seemed to follow the same logic. And why would Bondora want to hide data if the returns are so stellar on the platform? To an outsider, trying to hide data indicates that something’s not right, even though I can’t precisely put my finger on it.

I am still a fan of Bondora overall, but I have to say that if they keep these kinds of changes up, forcing investors to do their own Excel-based analysis on the datasets in order to get usable conclusions, Bondora will become a less and less important part of my investment portfolio.

What do you think? Does Bondora look like it is trying to give actually useful information, or not? Do the changes seem evasive to you?

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