A Regional Assessment of Formal Financial Inclusion and its Effect on Agricultural Growth, Philippines, 2011-2018

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

Julieta A. Delos Reyes, Agham C. Cuevas

Abstract

The general objective of the study was to provide an assessment of the formal financial inclusion and determine its effect on agricultural growth among regions in the Philippines from 2011 to 2018. Specifically, the study: (1) estimated the financial inclusion indices among regions from 2011 to 2018; (2) determined the factors affecting formal financial inclusion; (3) examined the effect of formal financial inclusion on agricultural growth; and (4) provided recommendations based on the results of the study.

Secondary data on the indicators of formal financial access and usage, the factors affecting formal financial inclusion, and the agricultural growth parameter of the 17 regions were obtained from numerous reports of the Bangko Sentral ng Pilipinas and Philippine Statistics Authority from 2011 to 2018. The total number of observations was initially 136. However, it was reduced to 120 observations as it was detected that observations, specifically the estimated formal financial inclusion indices of the National Capital Region and Bangsamoro Autonomous Region of Muslim Mindanao were outliers.

The study utilized both descriptive and quantitative methods of data analysis. Simple averages were used to summarize annual data. The Min-Max rule or the distance- based approach was used to evaluate the indices. The panel data regression was performed to determine the factors that affect formal financial inclusion and examine its effect on agricultural growth.

Based on the results of the study, about 94 percent of the regions in the Philippines had achieved at least a medium level of formal financial inclusion. The remaining 6 percent or one region, was attributed to the low achievement of BARMM throughout the years. The transition from a medium to a high level of formal financial inclusion was also evident.

The variation in the level of formal financial inclusion in a region was positively and significantly affected by an increase in the per capita GRDP and the unemployment rate and a decrease in the portion of adults aged 15 years old and above in the regional population.

Furthermore, it was observed that formal financial inclusion had a significant positive effect on agricultural growth, as both phenomena moved in the same direction. Hence, for agricultural growth to proceed in the Philippines, a region should at least be financially inclusive at a medium level.

The results of the study suggested increasing awareness and familiarity with formal financial institutions, providing flexible financial assistance to self-employed and seasonally-employed individuals, and establishing more financial access points and providing more bank loans. It was also recommended that future researchers must focus more on contextualizing studies on financial inclusion on farmers and fisherfolk to provide a more comprehensive approach in describing its effect of agricultural growth.

Language

English

LC Subject

Agriculture, Finance

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2022 A14 S26

Notes

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Document Type

Thesis

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