In the midst of our “MAS.664 AI for Impact” class at MIT, we were hit by covid-19.
Working remotely, my teammate and I took the opportunity to dive into the problems and potential solutions for the economic crisis that stemmed from the health crisis.
In publishing our research and project proposal on Medium (on right), we hoped to add our findings and ideas to the current worldwide discussion. Information accurate as of 5/10/2020.
Click to access article, or: https://medium.com/@rogercawdette/modernizing-old-financial-systems-introducing-the-social-collectivized-fund-to-combat-the-current-acadea86ac92
TL;DR Research Highlights
Through research: We pinpointed that one of the solvable problems is to promote distribution of capital in the economy, from people currently not spending and sitting on their disposable income (our savings rate escalated to 13.1% in March 2020!) to small businesses that in dire need of that capital to sustain their functions past the crisis.
We ask: While federal aid and loan packages like the PPP and CARES go so far, is relying on the government the best we can do? Are there other ways to redistribute capital in the economy — specifically, from the households who seek to invest, to small businesses and startups in need of access to credit — that bypass governmental delays and constraints?
To solve this question: We look at using modern technology, specifically AI capabilities, to revitalize historical financial systems of investing and lending devices, the tontine and the hui.
With our research, we propose the Social Collectivized Fund:
The Social Collectivized Fund would be a lending-investing marketplace that brings together these investors and borrowers who are currently not in traditional markets.
Meaning, we are engaging socially conscious individual retail investors who have so far not participated in the stock market (a rough market size estimate of at least 5 million, as supported by the incredible 3 million surge in new individual investor accounts at Robinhood, the retail investment platform, in May 2020, as well as the massive boost in percentage volume from small trade sizes for shares and options since March 2020), and small businesses that are not being adequately served by bank loans (which is 1 in 10 small businesses, or, 3 million).
By providing a platform through which these two parties can make trades that they would otherwise have no channel to participate in, this new marketplace would also help to close the deadweight loss in our economy and usher liquidity.
Learn the rest from our Medium article!