The Young Economists

2013 Winter Issue, Volume 3

Presented by

Fish-2-Finance
California Based Club Practicing Microfinance, Microcredit, Fundraising and Community Development

ISSN:23326662

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The Young Economists

2013 Winter Issue, Vol. 3

TheYoungEconomists
2013 Winter Issue, Volume 3
Leadership
TheleadershipteamofTheYoungEconomistsisCaliforniabasedindividualswithpersonal experienceinPeertoPeermicrofinanceandmicrocredit. EditorinChief: CoEditorinChief: AdonisLu Biyonka Liang AdonisLu@gmail.com Biyonka@gmail.com

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SeniorEditors: WilliamChen MichaelLin CharlieTong ChloeWang Wirly Xiao Thisissue/Features: MarkKyaw ChristinaLin AdonisLu MarilynLin ChristinaLin MarkKyaw StevenTong JasonWang SandyPan JasonWang MichaelLin CharlieTong FrankieTao MarilynLin FrankieTao JoannaWan CarynWong HannahLu WilliamChen Biyonka Liang StevenTong JoannaWan

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2013 Winter Issue, Vol. 3

Marketing
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Publishing
Publisher: LuminaryWorks,Inc. Tel:+0019498787088

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Sponsor: Fish2FinanceClub Tel:+0019492310899

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AdvisoryCommittee
CrystalCooper: WoodbridgeHighSchool, Irvine,California

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2013 Winter Issue, Vol. 3

CONTENTS
Winter 2013 Issue, Volume 3
LettersandCommunication
5 NotesfromtheEditorinChief
isapeerreviewed,onlineandprintedjournalservingtheworldwide communityofByAdonisLu

Fish2FinanceandtheYoungEconomists
TheYoungEconomistshasadedicatedcolumntoreporttheFish2 Financeactivities ByCrystalCooperandAdonisLu

9 19

CallforArticles,Papers,andLetterstotheEditor
ByEditorialBoard

GuidelinesforAuthors

ByEditorialBoard

Microfinance
8 WhatisPeertoPeerMicrofinance?

is to help people be more financially self-sufficient through the lending

of money and insurance to those who are not able to access financial institutions ByMarkKyaw

10

ReasonsforMicrofinance
low-income individuals are provided with financial services to help lift themselves out of poverty ByChloeWang

13

P2PMicrofinanceTrendAnalysis
In the UK, Zopa was the first company to offer P2P loans the largest UK P2P lender with over 500,000 customers ByMarkKyaw andMichaelLin

15

MicrofinanceinNepal
two Nepalese women from a rural town, improved their lifestyles through ByChristinaLin

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3 5 Page

The Young Economists

2013 Winter Issue, Vol. 3

CONTENTS
Winter 2013 Issue, Volume 3
PeertoPeerFinanceActivitiesintheU.S.
11

IntroductionoftheFish2FinanceClub
a student led club main experience derives from international philanthropy projects in Ningxia, China where students loan peer-to-peer micro loans to farmers. ByMatthewBaccaria

16 17

Fish2FinanceUpcomingEvents
P2PtriptoNepalandChinainAug2,2014 ByBiyonka Liang

P2P MicrofinanceRuralPovertyAlleviation ProgramsintheUnited States

everysummerandwinterforhighschoolstudentstoresearch ByAdonisLu

PeertoPeerFinanceExperience
15 MyFirstDayVisitingtheVillageofDaGouYuan
Ialsovisitedthetentsthattheyusetoplantcropsin ByCarolynWong

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MicroanalysisinaThirdWorldCountry
ADetailedAnalysisofP2PMicrofinancein ByJoannaWan

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BreakingtheCycleofPoverty
Why are these areas sunken while the rest of China is seamlessly floating? ByClaireLin

13

MyP2PExperience:Howitchangedmyperspectiveoftheworld
ByFrankieTao

FinanceCorner
24 FederallySubsidizedvs.UnsubsidizedStudentLoan
student loans are considered direct loans, meaning

4 December 2013/Volume 3

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The Young Economists

2013 Winter Issue, Vol. 3

LetterfromEditorinChief

Anindependent,peerreviewedjournaldedicatedtothe microfinanceandmicrocreditinvestigationtosupportthe financiallychallengedinundevelopedareas

AdonisLu,WoodbridgeHighSchool,Irvine,California
TheYoungEconomists isapeerreviewed,onlineandprintedjournalservingthe worldwidecommunityofmicrofinancestudents.Itisdedicatedtomicrocreditandits applicationstoindividualsandgroups,aswellastheexpansiontoundevelopedthird world.TheYoungEconomists ispublishedbyLuminaryWorks,Inc.,acorporationbasedin Irvine,California.ItisregisteredasanonlineandprintedjournalwiththeNationalSerials DataProgramoftheUnitedStatesLibraryofCongress,InternationalStandardSerial Number(ISSN)23326662. TheYoungEconomists wasinitiallyestablishedin2011asaP2PPovertytoProminence StyleMagazine.The2013winterissuewasthefirstissueofTheYoungEconomists publishedasanindependentjournalwithanofficialregistrationISSNnumber.The decisiontoformalizethe YoungEconomists asanindependententitywasbeneficialto microcreditandPeertoPeersociety.Forourjournalitprovidedanopportunitytoreach outtoalargerreadershipandtopotentiallyestablishrelationshipswithanumberofhigh schoolsintheregion.Meanwhile,weexpressoursincereappreciationtooureditorial staffandmanagementteamforthesupportduringthe YoungEconomists' formeryears. TheYoungEconomists isstaffedentirelybytheFishtoFinanceStudentClubmembers andvolunteerswiththesupportfromAdvisoryCommitteemembersfromMetLife, Allergan,Inc.andWoodbridgeHighSchoolatIrvineCalifornia.Itisdependenton donationstomaintainoperations.Pleasebegenerousinsupportingthe YoungEconomists to(cont.inpage7)
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2013 Winter Issue, Vol . 3

Fish-2-Finance and The Young Economists

CrystalCooper,AdonisLu,WoodbridgeHighSchool,Irvine,California

Fish2Finance, a microfinance and microcredit related club, was initially founded by Mr. Adonis Lu within Woodbridge High School of Irvine California under the supervision of Advisor Ms. Crystal Cooper to promote awareness of microfinance and microcredit to local community. The unique goal and mission of the club attracted students, who are motivated to help people in undeveloped area to make great strides towards economic independence. In 2013, Mr. Adonis Lu and his business partner, Ms. Biyonka Liang from University High School of Irvine California, extended the club to include members from three Irvine public high schools, two private high schools in Orange County and one high school in San Diego County in California. To document the interesting discussion topics of the club activities and initiate in depth research in microfinance and microcredit area, the club formalized and extended its club communication documents as the Young Economists under the initiative of Adonis Lu and Biyonka Liang. The Young Economists is an independe nt entity and beneficial to microcredit and Peer to Peer society. It provided an opportunity to reach out to a
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larger readership and act as a communication bridge to establish relationships with a number of high schools. The leadership team of The Young Economists is a California based group of individuals with personal experience in Peerto Peer microfinance and microcredit. In 2013, Mr. Lu attended a microfinance and microcredit summer camp hosted by IvyMax Foundation, in one of the undeveloped areas of China, where he provided individualized support through loans directly to the borrowers. Ms. Liang was actively involved in investigation and research in microfinance processes. She initiated and led number of donation events with Adonis Lu and the management team of the fish2Finance club to support the P2P activities. The management team of The Young Economists is a key contributor for the magazines formalization. The Young Economists has a dedicated column to report the Fish2Finance activities and their contributions to the local communities as well as third world countries.

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2013 Winter Issue, Vol. 3

MakeaDonationtoSupport
The Young Economists
MakeaDonationandBringHopetoPeoplesLives

Beforegiving,themindofthe giverishappy;whilegiving,themind ofthegiverismadepeaceful;and havinggiven,themindofthegiveris uplifted. Anguttara Nikaya

The Young Economists is staffed entirely by volunteers and depends on your contributions for its continued operation. Please be generous in supporting The Young Economists. Consider how important this publication is in helping the financially-challenged individuals. Please contact the Editor-in-Chief.

LetterfromEditorinChief(cont.frompage5)
ensureitscontinuedservicetothemicrocreditandPeertoPeercommunity.For furtherinformation,pleasecontacttheEditorinChief. Copiesofthisissueinitsentiretyorindividualarticlesmaybedownloaded forfree,subjecttocopyrightrestrictions.TheYoungEconomists iscopyrighted underinternationallaw.Contentmaybecopiedforpersonalusesolongas copyrightstatementsareincluded.CommercialuseordistributionviaInternet mediaisstrictlyprohibitedwithoutthewrittenconsentoftheEditorinChief. Citationsfromarticlesorpapers,ofnomorethan400words,arepermittedfor researchpurposes.
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2013 Winter Issue, Vol. 3

What is Peer-to-Peer Microfinance?

MarkKyaw,WoodbridgeHighSchool,Irvine,California92604
What is microfinance? Microfinance is a type of banking service that provides financial services to the unemployed or low income families. The purpose of micro-finance is to help people be more financially self-sufficient through the lending of money and insurance to those who were not able to access financial institutions previously. Many institutions have made profits from the poor by loaning them insurance and money with lower interest rates than normal banks or companies. So, what is Peer-to-Peer Microfinance? And how does it differ from Microfinance? Peer-to-Peer (P2P) is more convenient for farmers due to the fact that there is no need for financial institutions in order to make transactions. In Contrast, microfinance is mainly targeted towards small business owners. Without the involvement of such institutions, it is easier to apply for microfinancing. Since no middleman is involved, transactions are faster and cheaper for both lender and borrower. Also, in P2P Microfinance, interest rates are lower than other financial institutions; however there is more risk depending on where the money is invested. Benefits? People in need of money can now receive loans with a low interest rate rather than go to a large bank or other financial institution, which requires that a recipient have a past credit, which many farmers may not have. The money they receive can be spent however they want from repairing or purchasing new equipment to (cont. in page 9)

Children in Da Gou Yuan Village learning in elementary school.

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2013 Winter Issue, Vol. 3

What is Peer-to-Peer Microfinance? (Cont. from page 8) peoples daily necessities. P2P Microfinance mostly targets farmers settled in rural areas who are suffering from poverty. In the long run, P2P is the best way to improve impoverished communities. Today, there are many financial institutions that have P2P across the world in major poverty stricken areas, such as the countrysides in China and the loans they offer
Agrandmatakingcareofher grandsonafterworkinginthefield

can be requested for by going to the institutions or via the internet.

Call for Articles, Papers, and Letters to the Editor

The Young Economists invites the submission of highquality articles and short papers of interest to readers. We also invite readers to write letters to the editor with comments and feedbacks on articles and p ap e r s pub l i sh e d i n p r e v i o u s i s s u e s . The Young Economists provides a forum for the presentation and discussion of a wide v a r ie t y o f t o p i cs w i th in th e f i e ld o f microfinance, microcredit and P2P activities. Typical interests include, but are not limited to, PeertoPeer Finance Experience, P2P around the world, P2P comparisons between various regions, differences between microfinance and microcredit, who profits in microfinance and microcredit, opportunities and limitations in microfinance, amount of money and people involved in microfinance in the third world countries, research on why microfinance and microcredit are not popular in the U.S. and western EU countries, and the feasibility of microfinance and microcredit in the U.S. Articles and papers that compare differences in P2P models in different countries are particularly encouraged. We also welcome the submission of articles and papers that study the contributions by P2P to the economy of the undeveloped countries. We value articles and papers that are on the cutting edge of their fields. We also appreciate articles and papers covering basic concepts, so long as they are insightful (cont. in page 23)
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2013 Winter Issue, Vol. 3

Reasons for Microfinance

Chloe Wang

ChildreninNingXia watchtheirgrandmapreparecorn

and have a very small prospect of making their own lives better. Through microfinance, lowincome households are given the opportunity to start a business to enhance their quality of life. If recipients of loans successfully learn how to manage their finance, they can have a better chance of creating a profitable business that, in turn, will pay back the loans and be used to insure their own livelihood. If successful in their businesses, the previously underprivileged families can direct those funds to a more nutritional diet, preventing diseases among their family and perhaps even aiding other families in starting up their own company. Ideally, previously poverty-stricken families will help other destitute families to start their own business, eventually affecting the entire population within an area and improving all of their living conditions, only improve their households economic position, but also their own position within the household. The sight of (cont. in page 14)

Micro financing is a concept in which low-income individuals are provided with financial services to help lift themselves out of poverty. Individuals are often from third world countries and do not have the means to access typical banking services. There are many positive outcomes that can result from micro financing, such as ability for low-income households to meet rudimentary needs, the promotion of gender equality, and an overall improvement in the economics of low-income households. Underprivileged families often are malnourished, exposed to preventable diseases,

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2013 Winter Issue, Vol. 3

Fish2Finance

Fish2FinancemembersinBeijingheadingfor theirNingXia P2Pservicetrip

Who We Are

MatthewBaccaria

Fish to Finance is a student led club from Irvine, CA. F2Fs main experience derives from international philanthropy projects in Ningxia, China where students loan peer to peer micro loans to Muslim farmers. Their purpose is to support those families incomes, while improving the surrounding impoverished community. With the establishment of F2F, members have now broadened the clubs focus, including aspects of fundraising, community service and development. F2Fs future endeavors will incorporate supporting a new community development project in Kathmandu, Nepal during the summer of 2014. One of the focuses for this trip will be an investigational study to explore the possibility to start P2P program in Nepal to supports children with displaced mothers. In addition, newer members continue to venture to Ningxia, China for additional Peer-to-Peer Microfinance projects.

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2013 Winter Issue, Vol. 3

MyFirstDayVisitingtheVillageof DaGouYuan
CarolynWong
The day for visiting the village finally came. It started out by my waking up to the cold air of Ningxia and putting on more layers of clothing than I have ever worn in order to prepare for the freezing temperature outside. For breakfast, we had noodles with beef on the side, which was gratifying and a great source of energy to start our busy day. Then we got on to the bus and headed toward the village of Da Gou Yuan. The journey to the village was short but bumpy. Once we got there, we were welcomed by Madam Zhao and were offered some snacks. As she gave us a tour of the village, I could feel the freshness of the air. It was so much more enjoyable than the polluted air of Beijing. I also visited the tents in which they use to plant crops and a house of a man who owned sheep and cows. Madam Zhao told us that he has a family that has many problems, and he is living with only his left arm. He has two granddaughters that have heart problems and his children are away at work. Despite all the complications in his life, he was able to live happily and have the ability to build a shelter for his livestock using his loans from microfinance. When we were about to leave, I shook his hand and a feeling of admiration came over me. I admired his strong will and his decision to struggle on despite his special circumstances. This man has given me another motivation in life. I have learned that even when times are hard, we need to stay strong and there will always be a solution to your problems. I vowed that when I return to the US, I would strive to do my best in school and not be overwhelmed by grades and college because there would always be other alternatives. After we met up my group, we went to a farmers house for lunch. They made us chicken with potatoes, mushroom with beef and clear noodles with carrots. Everything was really palatable and I was so full I thought my stomach was going to explode. We also chatted with a lady and gave her a few pieces of US currency as a souvenir and she gave us a shoe sole in return. We then returned to Madam Zhaos house and asked her questions regarding microfinance. The hardest part about this was that I couldnt understand her due to her accent, but with the help of my group, I eventually pulled through. Compared to yesterday, our teamwork improved and we were able to close the economic gaps between the first world America and the distant and remote China. Today was a day filled with knowledge: I not only learned more about microfinance, life of the villagers, but a valuable lesson from the man we met.

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2013 Winter Issue, Vol. 3

P2PMicrofinanceTrendAnalysis
MarkKyaw andMichaelLin,WoodbridgeHighSchool,Irvine,CA92604
The exact place of origin of Peer-to-Peer (P2P) Microfinancing/Lending is unclear. Microfinance began from the loaning of small amounts of money, which is known as Microcredit1 today. Mary Coyle, director of the International Institute at St. Francis Xavier University in Nova Scotia, Canada, studied and analyzed Microcredit history and said that they have operated for centuries -- probably since the introduction of currency. However, modern-day microfinance began with Muhammad Yunus in Bangladesh with the Grameen Bank. Today, these institutions have since spread across the world, concentrated heavily in 3rd world countries with different banks in each region.

LendingClubNewLoanOriginationsin$

ProperMonthlyNewLoanOriginationsin$

In the UK, Zopa was the first company to offer P2P loans and is currently the largest UK P2P lender with over 500,000 customers. This was followed by Funding Circle, which was the first company to offer (cont. Page 14)

1. 2.

Microcredit is same as Microfinance except that it is mainly for loaning money while Microfinance can refer to savings, loans, insurance, etc. P2B stands for Peer-to-Business. P2B is for small businesses and P2P is for individuals.

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Microfinance Trend Analysis (cont. from page 13) P2B2 RateSetter was the first to take safeguard lenders using provision funds in case borrowers go default3. MarketInvoice is the first P2B lending specifically against invoice4. There is also Assetz Capital which made the largest P2P loans in UK with about 1.5 million and increasing. There are also many companies that offer P2P and P2B services that are currently active and competing against the ones mentioned above, such as ThinCats, rebuilding society, eMoney Union, etc. Prosper started P2P Microfinance in the U.S. in 2005 followed by the Lending Club in 2006. In 2009, Zidisha emerged as the first company to let lender and borrower link internationally without a middleman and institute borrower risk analysis in the absence of financial records and history. Currently, the Lending Club is the worlds largest P2P platform, followed by Prosper in the U.S. Both companies issued thousands of loans and lent over $2 billion in total. As shown in the two graphs, the Lending Clubs monthly loans much higher than Prosper, making Lending Club one of the top in P2P loans in the world.

Reasons for Microfinance (cont. from page 10) women being subordinate to men is common in many countries, but micro financing is used as a tool to promote the belief that women are just as capable as men in any field of work. Moreover business does not promote qualities specific to any gender, such as how men generally have greater strength than women, thus allowing business to truly be a venue for any person looking to improve their financial situation. In addition, because studies have shown that poorer women tend to have the best credit ratings, they can care for the family more than men can. Improvements in the quality of life in many low-income households as well as gender equality promotion are only a few out of many possible results from microfinance. Micro- financing is a great way to provide the tools needed to help low-income households while creating successful businesses.

3.

4.

Default means when a person/group failed to pay or is unwilling to accept the debt when it is due according to the contract. Invoice is a document that proves the transaction of the sales occurred and the terms were met. It is also known as bills, statement, or sales invoice.

Reference:http://www.kiva.org

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2013 Winter Issue, Vol. 3

Microfinancing in Nepal
ChristinaLin,WoodbridgeHighSchool,Irvine,CA92604
Parbati and Thanu Karki, two Nepalese women from a rural town, improved their lifestyles through the Mahila Sahayogi Sahakari Sanstha Microfinance Institution, which was founded to financially help women in Nepal.The sisters borrowed a total of 10,000 Nepalese Rupees (5,000 each) to buy a Jersey cow and a few goats. Together with her husband, Parbati was able to build a new house from the money they earned in selling milk while Thanu was able to buy jewelry and manage her household expenses more easily. Both women now have financial freedom aside from their husbands earnings and can help with the livelihood of their families. Stories such as Parbatis and Thanu Karkis inspire people to donate and borrow: stories of the self-made man and how he or she overcame poverty to establish a rather well-todo business in a local rural community. In Micro-Credit Ratings International Ltd. (M-CRIL) January 2013 Report, researchers revealed the steady growth of the micro financing institutions in Nepal and how much success those institutions have been in helping lowincome families and individuals. The

IvyMax P2PNingXia WintertripStudents withtheLocalChildren

husbands earnings and can help with the livelihood of their families. Stories such as Parbatis and Thanu Karkis inspire people to donate and borrow: stories of the self-made man and how he or she overcame poverty to establish a rather well-to-

report stated that about 31% of the families eligible for microfinance are receiving that aid. That means about a third of the families in poverty in Nepal are receiving micro credit loans from well-established microfinance (cont. in page 16)

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Microfinance in Nepal (cont. from Page 15) institutions . These families will have the means to improve their socio-economic standing through well thought out financial planning appropriate to their living environment. which families are in need of funding, but also to which families are capable in coming up with a feasible plan to sustain themselves once they obtain that money. The lenders should also help the families in their planning if

necessary. Whatever the case, the bottom line is: micro credit is only useful in improving socioeconomic standing if and only if the individuals who are lent the money have a way of successfully earning money with the micro loans. The Fish to Finance Club that has been established in the past year in Irvine, California, is dedicated to its motto: "Give a man a fish, he'll eat for a day. Teach a man to fish, he'll eat for the rest of his life". The members are collecting donations not only to loan the assets to those in need, but also to teach the families how to appropriately handle finances in order to improve their lifestyle and financial capability. Fish to Finance will be going to Nepal this coming summer to help schools and families and to teach them how to fish.
1. www.globalhand.org/en/search/success+story/docu ment/28289 2. www.mcril.com/BackEnd/ModulesFiles/Publication/ NepalMicrofinanceReview2012.pdf

OneoftheKarki sisters

3. www.thehimalayantimes.com/fullNews.php?headlin e=Microfinance+in+Nepal+&NewsID=369150

Fish2Finance UpcomingEvents

August217,2014

NingXia China and Nepal: P2P Trip and Investigation.

April25,2014 April12,2014
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- P2P fundraising for NingXia trip: Art/Photo/Essay Competition

- World Journal Irvine Education Expo: P2P experience presentation www.theYoungEconomists.com

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2013 Winter Issue, Vol. 3

PeertoPeer MicrofinanceRuralPovertyAlleviation Programsin theUnitedStates

AdonisLu,WoodbridgeHighSchool,Irvine,CA92604

A Bangladeshi banker and economist began developing the concepts of micro credit and microfinance in the 1970s. By affording loans to entrepreneurs too poor to qualify for traditional bank loans, Yunus discovered a way to help individuals extract themselves from the cycle of poverty. In 2006, Yunus and the bank he founded (Grameen Bank) were jointly awarded the Nobel Peace Prize for their efforts to create economic and social development from below. Yunus himself has received numerous other national and international honors, including the Presidential Medal of Freedom, the Congressional Gold Medal, and honorary doctorate degrees from universities across the world. Today, Yunus microfinance model has inspired similar efforts in over 100 other developing countries. Like Professor Yunus, every one can make a difference in the world through microfinance! In 1997, Grameen Foundation was established to help the worlds poor address their own unique needs. The foundation is headquartered in Washington, D.C., with offices in the U.S., Africa, Asia, and Latin America and the Caribbean. It is one of

activities. The goal of the foundation is to

provide access to essential financial services and information on agriculture and health, assistance that can have widescale impact by addressing the specific needs of poor households and communities. They also develop tools to improve the effectiveness of poverty focused organizations. Another organization, IvyMax Foundation headquartered in Cupertino California, has a different approach than other P2P programs in the United States. Its P2P microfinance program not only targets Chinese peasant workers with the chance to make great strides towards economic independence, but also offers P2P training to high school students. Its well known Poverty Alleviation Camp enables lenders to extend loans directly to borrowers. High school students not only conduct research regarding microfinance, microcredit, and P2P, but also gain knowledge on how P2P works in China. The young adults conduct field trips/interviews with lenders and borrowers, and finalize operations report for future P2P microfinance program in China. Educated and inspired young adults will help shape the future of microfinance and use capital resources to make a global difference.

the P2P organizations with global P2P

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2013 Winter Issue, Vol. 3

Microfinance in a Third World Country

A Detailed Analysis of P2P Microfinance in NingXia, China
Joanna Wan
Ningxia, an agricultural Autonomous Region in China, that produces more than 65% of Chinas goji berries produced. Most residents are goji berry farmers and sheepherders. These independent farmers and breeders require additional funds in case of a drought or other accidents. Additionally, they need funding to expand their businesses; acquiring such funds however are usually difficult. Thus, a microfinance organization, YiNongDai, started in China to aid these farmers. It gathers funds from philanthropists and entrepreneurs and lends them to rural individuals who need loans to start businesses or to continue to run their businesses. YiNongDai is profitable; it is however difficult for illiterate farmers to apply for loans due to YiNongDais high interest rates and complicated and highly selective application panel. Timely Rain and the concept of Peer-toPeer microfinance addresses these issues. We specialize in providing micro loans, one village at a time, through a series of personal interviews. This program is not as selective compared to YiNongDai and it benefits the farmers in several ways. First, the interest rates are low, so farmers can easily pay back their loans. Second, the program is flexible. The amount borrowed and loan period depends on the choice and situation of each farmer. Third, members of Timely Rain interact directly with its borrowers. Instead of browsing through farmers online profiles and deciding recipients, members of Timely Rain pay visits to all potential borrowers to hear their needs first hand. As a result, farmers in Tongxin, Ningxia often choose Timely Rain over other microfinance companies (cont. in page 19).

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Microfinance in a Third World Country (cont. from Page 18) Upon returning from their 2013 summer trip, Timely Rain members saw firsthand the improvements its microfinance program made in the lives of its sponsored farmers. Due its low interest rate, Timely Rains microloans are able to accelerate economic and community development. This is a solution that will bring the farmers from poverty to prominence. The improvements its microfinance program made in the lives of its sponsored farmers. Due its low interest rate, Timely Rains microloans are able to accelerate economic and community development. This is a solution that will bring the farmers from poverty to prominence.

Fish2Financefundraiserforthenext NingXia tripwithabingonight

GuidelinesforAuthors
The Young Economists invites the submission of articles and short papers, either single or multiple authored. Articles and papers should be in electronic form in a format compatible with Microsoft Word or PDF. A submission should be attached to an email message addressed to the EditorinChief. The author should also provide a brief biography of no more than fifty (50) words. Submitted articles and papers are evaluated by the Editorial Board, whose decisions on publication are final. Final editing and formatting, including the sizing and placement of graphics and tables, are at the discretion of the Editorial Board.
www.theYoungEconomists.com

Articles are selected for publication in The Young Economists because we believe they represent a sincere search for truth, support the service mission to which we aspire, and/or contribute to the expansion of microfinance and microcredit. However, publication of an article does not necessarily imply that the Editorial Board or the publisher agrees with the views expressed. Nor do we have the means to verify all facts stated in published articles. We encourage critical thinking and analysis from a wide range of perspectives. We will not reject an article for publication simply on the grounds that it contains a reference to an objectionable source. We understand that the author of an article may not necessarily agree with the views, attitudes, or (cont. in page 23)
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BreakingtheCycleofPoverty
ClaireLin
China is a dominating second world country that is rapidly industrializing and is becoming a significant aspect of the world economy, the bits and pieces underneath its layers of prosperity hold the depths of poverty. Its world unfolds in black and white as the abysmal imbalance leaves a huge gap in between societal classes. Visiting Ningxia, one of the many impoverished areas in China, has allowed me to open my eyes to see how some people still have lifestyles stripped of the things that I, as a US citizen, take for granted. The villagers in Ningxia also lacked the basic daily necessities, such as a stable supply of food, water and shelter. But of it all, I kept asking myself these questions: Why are these areas sunken while the rest of China is seamlessly floating? Or how did the prominent parts of China get to where they stand today while the rest advanced in a much slower pace? It could not escape my thoughts, as I was curious to discover the reasons of why they could not find a way out of their sufferings. When a place or person is in poverty, it means that they do not have all the necessary things, the most impactful being money, to fulfill a secure life. Without money, the older generation does not have the ability to raise the younger generations properly, pay for the right education, or give them even the future. Many parents cannot even write or read themselves. Often, children drop out of school by the middle of elementary school to help assist in labor work back at home. While some may have received a few years of learning, the minimal knowledge they have acquired does not build a strong enough foundation for them to go on to pursue careers of their dreams. The continuous cycle of poverty is one that is hard to break. This is where microfinance come into play, big-time. The biggest difference between microfinance and charity is that microfinance is not a one-time action. Instead, microfinance is a skill that can stick with people for the remainder of their lives. Microfinance refers to a variety of financial services, which target low-income clients. It is a tool of extraordinary power to lift the poor out of poverty, by funding their microenterprises and raising their incomes. By helping them establish a strong business, they end up gaining the ability to support their own families and send their children to a learning environment where they are able to adopt new skills and ways of thinking. While microfinance cannot obliterate all aspects of poverty entirely such actions of giving small loans can not only stimulate the areas economy, but also pave a brighter future for the imminent generations to come.
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My P2P Experience
How it changed my perspective of the world
Frankie Tao
about microfinance and social differences in different countries, but I also learned about the ability to hope and expect a better future. Without this trip, I think I wouldn't have become who I am today. Arriving on foreign soil was completely shocking. I was not sure whether I would enjoy this trip or not. My mother signed me up for this program and I just went along with it. Little did I know that this trip The P2P trip in Ningxia was a turning point in my life. I understood what I wanted to do and how I wanted to help the people in need of support. The villagers were extremely kindhearted and innocent. They would offer help to strangers and would teach us about the world and their own religion. I was surprised that they were so open minded and kind. What plagued me throughout the trip was the idea that they were born into this type of environment. I didnt understand how this was fair, but I learned that these people may not have a lot of money or technology; instead, they had a large amount of hope and optimism. Their ability to hope and dream for something in the future. After this trip, not only did I learn would change me into a better person. When I first met some of the people in the hotel, I was nervous and so were the other students. Some of them were very quiet and tended to keep to themselves. My first day was a day full of adaptation. I would complain to myself about the smallest things and how the situation is not like anything in the U.S. I was even bitter about the fact that I would miss Christmas for this trip. Soon after, I took all of these words back. On the second day, the group was forced onto an eighteen hour train ride. At that time, I could not stand the uncomfortable beds and the cramped spacing in the compartments. All of the students complained about (cont. in page 22)
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My P2P experience (cont. from page 21) the surrounding strangers and their cigarette smoke in the air. To put it frankly, we were drama queens. Reflecting back on the train rides, I felt that they were already better than what the villagers could experience in their life. When we asked the villagers whether they have been to big cities, most of them said that they had never left their town before. They were either too old or too poor to afford a train ride. This made me regret all of my complaining because of my opportunity to travel across the globe, and yet they have never complained about their way of living. The Hotel was of low standards compared to the U.S. When I saw how people in the villages lived, I instantly thought that our hotel was the most luxurious building in the entire city. I was disappointed in myself at the end of the day because I was living in conditions that the villagers would never be able to live and yet, I was the only one complaining and whining about the bad conditions. I was disappointed with my selfishness and arrogant attitude toward these people and I told myself to value the values of things that I am given. I learned to understand how hard it is to obtain some things in the world and that nothing in the world is ever free. On the third day of the trip, we ventured into the village to meet the farmers and we saw the full view of their land. When I arrived I was genuinely surprised. I actually had no expectations because I did not know what to expect. When we were introduced to the village

chief, there were snacks on the table and the heater was on. They had shown us amazing hospitality even though they didnt have much to give. We saw some children and they looked around seven to nine years old. To my surprise, they were between the ages of nine and twelve. Soon after, I learned that in this village, malnutrition was prevalent and there are many shortages of food and water. Especially due to the fact that the village was located in the desert area, they dont receive an adequate amount of water for their health and crops. I was extremely impressed by what the past groups had accomplished. They had built wells that facilitated the amount of water that the farmers can receive. What they had problems with most was the lack of water and control of their crops. The villagers cannot control the weather, which caused their crops to suffer damages. For example, this year their watermelon crops were all destroyed because of the hail storm that hit one week prior to our arrival. This disaster further cut their already-low-income. I realized that not every society was prospering like America. I quickly realized that I had been living in a bubble. In the United States, I never expected a society that actually lives in such a way. The tour of the village gave me culture shock and a feeling of guilt that saddened me. I could not believe my ignorance regarding the situations of third world countries such as China. During our visits to the villages we would interview families (cont. in page 23)

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My P2P experience (cont. from page 22) about their financial backgrounds so we could better assess which family we would provide the loan to. We interviewed the first family, whose seventeen year old daughter was expected to support her entire family. I could never imagine myself in a situation like hers. When we interviewed her, she was very warm and kindhearted. Her mother was sick with asthma and could not work during the winter and spring. The seventeen year old girl would go to school and then return home to work in the field. Witnessing such devotion to ones family and her tribulation to make ends meet was an extremely emotional experience. Her example allowed me to be empathetic and realize that while we complain about cleaning our own room at home, its not quite as extreme as her situation. What surprised me even more the next day was when we found out she was actually adopted as an abandoned child. What made me admire

her more was how she wholeheartedly loved and treated her adopted parents as her own. The next few days went by in a flash and I thought of the many new things I learned in so few days. I learned about the world around me and stretched the boundaries of my experience. I learned about my abilities while working in groups and helping the villagers. However, what I learned the most was the awareness of kindness and amount of hope that was present in the village. Even with the scarce amount of resources, they continue to pull through and work their hardest. This moved me forward, and I want to continue in this direction. I realized that people who are privileged should have the kindness in their heart to support these people who cannot support themselves because of their insufficient amount of finances. I admire their strength and their optimism because I believe that in a modern society, these qualities are essential.

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Federally Subsidized vs. Unsubsidized Student Loans

Both federal subsidized student loans and federal unsubsidized student loans are considered direct loans, meaning they are loans from a lender to a customer without the use of a middleman or third party. The main difference between the two is that federal subsidized loans are based on financial need and federal unsubsidized loans are not. Therefore, interest accrues only on federal unsubsidized loans. The interest is capitalized, meaning interest is calculated based on the amount that has already accrued. To apply for either of these loans, one must fill out a Free Application for Federal Student Aid (FAFSA). Through this application, the school will determine what kind and how much student aid one will receive. While federal subsidized loans are determined by assessing the students financial needs, federal unsubsidized loans are determined by considering the cost of attendance and any other financial aid the student receives. Grade level is usually a factor for both as well. While both undergraduate and professional degree or graduate students are eligible for federal unsubsidized loans, most of the time, only undergraduates are eligible for federal subsidized loans. Therefore, due to the listed conditions above and the schools student loan rules, it is important for students to be familiar with both when applying for a loan.

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WhatwedointheP2Pcamp: Carryoutresearchregardingmicrofinance,microcredit,andP2P ConducttrainingonhowP2PworksinChina Interviewsbothlendersandborrowersinfieldtrips FinalizeoperationsreportforfutureP2Pmicrofinanceprogramsin China

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