I know girls who lost their virginity to guys at 13 and 14 in church homes of middle/upper class families. Although they weren't seeing 14 year olds, they were seeing 16,17 and 18 year olds. 14 year old guys will not know what they are doing so if they end up having sex or anything like that the girl is just as much to blame as the guy
Telling her no will just backfire, and if you talk to his parents, the same thing could happen with him. The best thing IMO would be just to invite the boy along with your family on outings and such so you can keep an eye on him, and make it seem as you do not care either way.
It's sad about 13 and 14 year olds having sex, because their little bodies aren't even fully developed yet, and their minds and emotions certainly aren't. The media doesn't help matters either as they seem to promote sex among teens. I really believe most young teenage girls have an instinctual fear of sex because of their underdevelopment and the risk a pregnancy could cause to their lives. Of course there always have been and always will be those few 13 year old girls who are very developed for their age.
Peer pressure and the media can overide those natural fears though; that's why it is so important in this day and age for parents to tell their kids the way it really is and what can happen.
That sounds like a very sensible solution.