Assessment of the Financial Literacy and Loan Repayment of Rice Farmer-Borrowers of Gabay sa Kaunlaran Agricultural Cooperative in Calapan City, Naujan, Oriental Mindoro, 2023

Date

8-2023

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

This study assessed the financial literacy and loan repayment of rice farmer-borrowers of Gabay sa Kaunlaran Agricultural Cooperative in Calapan City and Naujan, Oriental Mindoro. The rice farmer-borrowers were categorized into two groups: good and poor borrowers based on the classification set by the cooperative itself. The financial literacy level of all 85 active rice farmer-borrowers of the cooperative was assessed based on their financial knowledge, financial attitude, and financial behavior. The socio-economic characteristics and participation in products and services of the selected cooperative were described using descriptive analysis and measured its association with financial literacy level. The Mann Whitney U Test was used to determine the significant difference between the rank-sum of the selected socio-economic characteristics of the rice farmers-borrowers of the cooperative. The loan repayment rate was also determined and classified based on the FICO credit scoring system. The association of loan repayment rate and financial literacy components was tested. The tests of association were conducted using Fisher's exact test.

Based on the standard classification of financial literacy level from OECD (2013), the rice farmer-borrowers of Gabay sa Kaunlaran Agricultural Cooperative have a medium level of financial literacy, applicable to all components (i.e., financial knowledge, financial attitude, financial behavior). The study found that 19 rice farmer good borrowers have been classified with poor and excellent loan repayment rates while 26 rice farmer poor borrowers have been classified with poor loan repayment rates. Overall, 85 rice farmer-borrowers were considered poor loan repayors.

The result of Fisher's exact test showed that there was a moderate association between both financial knowledge and financial behavior with loan repayment rates at a<0.05 and a<0.01, respectively. In contrast, the financial attitude was found to have no significant association with the loan repayment rate of active rice farmer-borrowers. In terms of the association between socio-economic characteristics and participation in products and services of the cooperative and financial literacy level, income, source of loan and availment of savings products showed a significant positive association with financial literacy with values of Fisher's exact of 0.047, 0.024, and 0.003 at a<0.10, a<0.05, and a<0.01, respectively.

Moreover, the problems encountered by the respondents influenced their financial literacy and loan repayment performance. These problems include eligibility for a loan, unstable price of inputs, unsecured crop production, and low price of palay.

Based on the results, the study recommended the cooperative to conduct training and seminars as a refresher on several financial topics while rice farmer-borrowers should increase their engagement in financial programs provided by the selected cooperative. Gabay sa Kaunlaran Agricultural Cooperative should also be able to reclassify their farmer-borrowers based on the FICO credit scoring system to properly craft their activities and programs. For future studies, it is recommended to include other independent variables such as financial management, years of experience in farming, and income allocation to assess the financial literacy of the farmer-borrowers. The study may also be expanded to include other cooperatives and barangays to test whether the results apply to the whole municipality and other cooperatives.

Language

English

LC Subject

Financial literacy, Rice Farmers, Cooperative Societies

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2023 A14 H85

Notes

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Document Type

Thesis

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