Credit Decisions of Selected Public Market Retailers in Muntinlupa City

Date

5-2019

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Arlene C. Gutierrez

Committee Member

Hanna D. Miranda-Quibot, Normito R. Zapata, Jr., Loida E. Mojica

Abstract

The general objective of this study is to provide an analysis of the effects of retailers’ characteristics on credit decisions of selected public market retailers in Muntinlupa City. Specifically, this study aims to: 1) present the socio-demographic and business operation profiles of selected public market retailers in Muntinlupa City; 2) describe the credit situation among the selected retailers; 3) discuss the business operations and credit financing issues faced by retailers; 4) assess the factors influencing credit decision of the selected retailers; 5) determine the acceptability of Pondo para sa Pagbabago at Pag- asenso (P3) Program of the Department of Trade and Industry (DTI); and 6) recommend ways to improve the business operations and financing activities of the retailers.

The conceptual framework of the study was adapted from Britania (2001), Castro (2002), and Dequito (2015). This study used a descriptive research design. Primary data were collected through personal interview with ninety-six (96) selected market retailers. Secondary data, on the other hand, were obtained from the city government and from the CEM Library. Descriptive statistics through tabular presentation, logistic regression analysis, and the determination of effective interest rate of each credit arrangement, were used for quantitative data analysis. Content analysis was used for qualitative data analysis.

On the average, the selected retailers are 50 years old, women, currently married, and mostly high school graduates. On the other hand, an average household has 4.69 members, 2.03 children, age of 33 years old, and are predominantly single, college graduates, and its members are mostly students. All but one retailer view their retail businesses as their household’s main source of income. On the average, their daily household income is Php 8,289.16, while their daily household expenses is Php 2,223.09.

As to their business operation profiles, the retailers have 20 years of retailing experience, 6.96 days of operations in a week, 15.25 hours of operations in a day, and 2.02 employees. Most retailers chose the commodity due to familiarity, are small-scale enterprises, had no prior retailing experience and engaged in retailing due to parental influence, and use notebook for record-keeping. In relation to their procurement practices, most of them source from other retailers and from National Capital Region, receive the products through delivery, use public transport when the mode is not delivery but pick-up, pay once every day, by cash, and once weekly when consignment or installment. On the average, their starting capital is Php 50,800, with most sourcing it from their own money. The mean addition to starting capital is Php 79,118.75, with most sourcing it also from their own money. Meanwhile, on the average, their daily working capital is Php 67,920.98, while their daily sales is Php 24,850.00, and their daily expenses is Php 11,910.31. The most common issue herein is the lack of sales.

In terms of the credit situation of the selected retailers, most have had credit experience at least once. From these retailers, most have current active loans and borrowed solely from informal credit sources. On the average, their loan amount is Php 82,971.19, while the net proceeds is Php 82,594.92. Meanwhile, the mean nominal interest rate is 15.44% while the mean effective interest rate is 461.26%. On the other hand, the average maturity term of loans is 102.39 days while the average actual renewal period is 89.56 days. Most sources also require daily installments and no guarantee. Accessibility is the most popular consideration in choosing credit source. Most retailers missed payments for loans, were not asked for the purpose of their loan, and did not have credit experience outside business. The most prominent issue herein is retailers’ inability to repay loans.

With regards to the Pondo para sa Pagbabago at Pag-asenso (P3) Program, most were unaware of it. The most acceptable loan feature under the program is the lack of collateral. Most retailers said that they will borrow from P3 Program over other loan sources. Using the logistic regression analysis, it was found that lower-income households and businesses that are older and have higher average working capitals are more likely to borrow money. It was also found that bigger households, businesses that have higher sales, and retailers who are less likely to consider accessibility in their credit source choice are more likely to borrow from formal credit.

Retailers should improve their household budgeting and have good record-keeping practices. The financial sector should also push for creation of bank and cooperative satellite offices and relax credit access. The government, meanwhile, should ensure financial education, facilitate business ownership trainings and workshops, expand P3 Program to reach more eligible borrowers, and improve its regulatory policy.

Language

English

LC Subject

Retail trade-Finance, Credit--Management, Market surveys

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2019 M17 S26

Notes

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Document Type

Thesis

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