Assessment of Credit Market Choice and Utilization of Rice Farmer-Borrowers in Bay, Laguna, 2022

Date

6-2022

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Christian Paul L. Fang

Committee Member

Christian Paul L. Fang, Julieta A. Delos Reyes, Agham C. Cuevas

Abstract

The study assessed the credit market choice and utilization of rice farmer-borrowers in Bay, Laguna. Specifically, the study: (1) described the socio-demographic and farming- related characteristics, as well as the social proximity, credit accessibility and availment situation, and credit utilization of rice farmers-borrowers; (2) analyzed the factors affecting the credit market choice of rice farmer-borrowers; (3) analyzed the factors affecting the level of credit utilization of rice farmer-borrowers; and (4) suggested possible approaches in credit provision to be conducted by the local government, financial institutions, and other key players based on the identified results.

A complete enumeration of the 28 rice farmers who borrowed from the bank and cooperatives was employed. Systematic sampling of 35 participants from the remaining farmers from the master list was done to identify those who had borrowed from informal lenders. Both primary and secondary data were utilized in the study.

Descriptive analysis was used to describe the socio-demographic and farming- related characteristics of rice farmer-borrowers, as well as their social proximity, credit accessibility and availment situation, credit utilization, and repayment. The one-way ANOVA and Kruskal-Wallis test were also used to determine the significant differences in the selected socio-demographic and farming-related characteristics, distance of institutions, amount of loans granted, interest payments, transaction costs, effective borrowing costs, credit utilization rate, and loan repayment rate of those who borrowed from the bank, cooperatives, and informal lenders. Multinomial logistic regression was used to analyze the factors affecting the credit market choice of rice farmer-borrowers. Cragg hurdle regression was also used to analyze the factors affecting their level of credit utilization.

Results of the study showed that the decision of rice farmer-borrowers to avail of loans from the bank and cooperatives can be significantly affected by their distance from the lending institution, sex, educational attainment, age, household size, land tenure status, and access to agricultural extension services. Factors such as age and intention to expand the rice production were also proven significant in influencing the level of credit utilization of rice farmer-borrowers. Lastly, it was also apparent that those who borrowed from the bank and informal lenders had lower utilization rates compared to those who borrowed from the cooperatives.

Based on the results, the study recommended the following: (1) those who availed of loans from informal lenders may try availing of loans from banks and cooperatives; (2) the cooperatives should create disciplinary and reinforcement actions to address late and non-repayment of loans by the rice farmer-borrowers; (3) further assessment studies on the factors affecting the credit market choice and utilization of farmers should be conducted; and (4) the viability of cooperatives as bank conduits, the topics of seminars and training which made the factor of access of agricultural extension services significant, and the reason/s behind the need to borrow money of rice farmer-borrowers despite not wanting to expand their rice production should be explored.

Language

English

LC Subject

Agriculture

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2022 A14 M37

Document Type

Thesis

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