Kye

Historical Roots of Kye

Korean Americans faced many kinds of discrimination when it came to securing employment in the early years of their immigration boom. Discriminatory laws prior to World War II prevented Korean Americans from gaining their citizenship, and, as a result, very few of them were able to work in their former professional roles. Although the law changed in later years, many Korean American immigrants were still unable to work in their trained professions in large part because of the language barrier they encountered upon relocating to the United States. They therefore accepted menial labor and low-end service jobs until they were able to start their own businesses. Eventually, many Korean immigrants moved into small business ownership out of economic need.

Kye in Practice

First, a sponsor initiates the process by deciding what the size of the fund will be. This organizer then recruits donors (often from past recipients), collects funds, and acts as the contact point for the borrower. In exchange for this work and the risk he or she takes on through his role, the organizer/sponsor receives status and benefits within the network; he or she receives the first lump sum collected.

Take a hypothetical group of small business owners: Mr. A, Ms. B, and Mr. C. They are probably aspiring to run similar types of businesses. For our purposes here, let's say they all are trying to run corner stores in their area. They each pool all available money, along with at least one other person who has already succeeded in business in the past—this is the last member of the kye chain, and he or she is solely a lender. When the kye chain has run its course, this last link receives the total amount contributed to the fund, plus any interest earned. The members who make up the middle ranks act as both borrowers and lenders.

Once the kitty is collected, that sum goes to work for each of them. First, Mr. A will take the sum and use it for his store. The group will have agreed to the terms in advance, but generally, Mr. A will be allowed to take the entire sum as it stands at that point and use it for some period of time—this will vary based on his rank in the group but will be enough for the business to get on its feet. During that time, Mr. A will be allowed to keep his profits rather than pay back the group; in this way, he has a much stronger chance of success. Then, after that period is over, Mr. A passes on that sum to the next would-be business owner, Ms. B, and the cycle repeats.

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