Here is a moving story from our intrepid Kiva fellow in the Philippines, Sloane Berrent. It details the lengths to which people will go in order to be educated. The desire for education and the knowledge that it can lift people from impoverishment is clear and stark.

Within the story lies another imperative: the desire to give. Giving has become my passion whether it’s time, money or stuff. Yes reforming the global financial system is interesting but nothing will ever surpass the desire to perform service to others in a direct way. It’s our most universal law.

To raise $42 for a boat would take a few seconds these days. It’s that low cost, diversified approach that makes the web network so powerful.

These Stories from the Field are wonderful to read. People want connections, they want to see they are making a difference and they want it to be real.

Well it doesn’t get any more real than this.

Following on from the news about Kiva moving into the US small business market, fleet footed Ben Kepes calls us to action in New Zealand.

Small businesses in NZ have seen no relief from high interest rates in the recent lowering of rates here. At the same time credit is hard to come by and many business owners have resorted to credit cards to keep their businesses going.

This is a troublesome state of affairs given its the productive economy that has to earn the dollars to pay back the humungous debt necklace hanging around the necks of Kiwis.

So what’s the state of play with microfinance at the moment? Well Kiva is going great guns. It’s really tapped into people’s desire to help and be generous in giving but created this new joy of creating and empowering change for people. It connects people together and that personal touch pulls the punters in.

The more tradtional p2p lending services are not finding life so easy. Charis Palmer reports here on recent developments citing problems for Prosper in the US and some success for Zopa in the UK. Locally Peermint has fallen by the wayside, Nexx hasn’t really got going and Lending Hub has joined a busy Australian market.

So there’s no shortage of platforms but it’s proving harder than expected to deliver the business. But there seems to be no platform for small businesses to secure funding. This is certainly an opportunity as there is certainly a strong and established market on the borrowing side with appropriate forms of due diligence available.

The major stumbling block for p2p start ups has been compliance with various regulatory authorities. However there may be ways around this and with politicians supportive of the small business sector the time may have come for a serious attempt to create what would be a mini-corporate bond market funded by the retail investement market direct.

Now that sounds like a major step forward in building a more productive economy.

Early in 2008 I commented on the shaping of a post-imperial world where the flow of investment funds, and coporate takeovers, was coming from the East to the West, with China, India, Russia and the Gulf States recycling $ reserves and new found wealth into weak and failing companies in the West.

The catastrophic implosion of the US financial system in the last year has merely emphasised this change in the balance of monetary might.

So when Kiva, that beacon of social entreprenuership, decided to offer loans in the US itself, there was a huge intake of breath. The US needs microloans??!!!

Of course it does. How do small businesses get funded? Normally by people taking out second mortgages, borrowing from friends or ramping up credit cards. In fact I’m told many businesses fund cashflows problems using personal credit cards. Why?

Because banks have a model where they lend on housing as collateral…oh yeah that worked well…not.

The old fashioned approach to banking (one my father was involved in for 42 years) was lending to small business people and supporting them through the ups and downs of the business cycle. Investing in people and creating relationships of trust.

I think we are headed back to this and it’s peer to peer lending that is making this happen. The web itself has allowed these bonds to be built, that’s what networks are after all. Lots and lots of micro connections. Isn’t that the amazing thing about the web? It’s so huge and vast yet it’s simply a conglomeration of molecules connected together.

I know I’ve been bagning on about this for ages but banking, like media, will be forced to change. The micro world is causing new networks to be created, new bonds to be formed and new efficiencies to be found.

Harnessing the power of the web is allowing this to happen.

Microfinance has shaken up the banking world. I enjoyed reading Matt Flannery’s piece on the Kiva story.

Microjustice will no doubt change the legal world in due course.

We already have microrelationships, micromedicine surely on the way.

And the biggest prize of all………..microgovernment.

The change is coming, the inexorable march of system reorganisation is humming away in the background. It’s not top down, it’s an unseen mass movement with no control function. A pure chaotic system in action, free to develop and receive feedbacks in real time.

Who would have thought a lender from Domenica would be funding a borrower in the US.

Yes times are changing.

This is a no brainer.

Intel donating 25cts for every time you click on this page.

There are links to Global Giving, Save the Children and of course Kiva!

Giving as a way of life, monetarily or time wise, is a growing movement. Technology and social media is helping this really transform the process of philanthropy. It’s creating social innovation and driving potential long terms changes in how society can work.

Perhaps even sending a signal to the tax and welfare system. Maybe we don’t need big government. Maybe something new will come from all of this.

Great piece in the Herald looking at how things might or could have been different if women had been in charge of the financial system. Harriet Harman has floated the idea in the UK of appointing more women to the boards of banks in order to soften the the testosterone fuelled activities of the current lot.

The macho culture of traders has been studied of many occasions focusing primarily on testosterone. Of course this is a popular fall guy for any over the edge activity that men get themselves fired up on. But research shows this to be true.In fact some researchers go as far as to blame the credit crunch on over pumped up Gordon Gekkos.

There is no doubt that this type of beahviour has a strong causative effect on bubbles and general winning of big bets. It’s a natural high…..who hasn’t felt it when winning a bet at the races, or getting something right in a quiz or a great result in an exam.

The good news is that women are no so affected by these grand illusions preferring to focus on the basics like how much money is in the account and other boring details like that.

We’ve yet to read a bout a female “rogue trader” so maybe Harriet is onto something here. But I don’t think it’s an equality issue, it’s more about skills. Women have skills that we need to use in all areas and money is a pretty crucial one as everyone is now finding out.

Imagine banking for the people……the service of providing money. As opposed to banking…….punting huge amounts of cash in the global casino.

Something tells me they are onto something here. Let’s face it…women have run the household budgets forever…they are the true oikonomists.

More and more women are getting into the money business…….how about the ladies at Wokai? i really like their style and approach. As i have noticed before nearly 80% of my loans on Kiva have been to women. Maybe i figure they are more likley to knuckle down and pay it back

I’m sure there are some great examples of women in this line of work or ones up and coming. I invite you all to nominate your favourites and let the bandwagon roll on.

Somehow I haven’t heard about Microplace but it’s an exciting addition the the expanding world of P2P lending and microfinance. It is different to Kiva because you invest in a security (like a bond) for a fixed term, usually 2-4 years and you receive a return, although minimal 1.5-3%. As I understand it the big issue is getting registered with the Securities and Exchange Commission. Microplace is backed by eBay which certainly helped whereas Kiva was a start up and was forced into going the non-profit route.

It’s great to have two companies to compare and contrast.

Kiva is more personal. I choose who I want to lend to and can received feedback and updated information on how the borrower is getting on. This is really important as it builds a web of social capital.

With Microplace you are buying a package of loans and so you don’t have that personal contact. Also there is the issue of return. I think it’s good you can get a return on your loan as long as it does not influence the rate being paid by the eventual borrower.

So you could actually lend to the same borrower through either Kiva or Microplace but somehow Microplace can get you a small return on your money. I’ll be digging further to see how they do this.  So far they have been very helpful and open.

In a way the securitisation approach is not much different from mortgage backed securities where people invest in a package of mortgages. Of course we all know what’s happened with those. However i would stress this is completely different in that all the loans are unsecured anyway. It’s also important to note that default rates on microfinance are a mere 1-3%.

When we cut out the banks and go direct we enable relationships of trust to be built. This allows the traditional aspects of social relationships to take place. No one cares if you default to the bank but to default to other people can bring personal shame and other social fallout.

These 2 companies are blazing a trail for the rest of the finance industry. P2P finance could well be the next big thing.