Factors Affecting Loan Utilization Among Microentrepreneurs Evidence from Grameen Pilipinas Microfinance, Inc. (GPMI)

Date

6-2025

Degree

Bachelor of Science in Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Maria Luisa G. Valera

Committee Member

Jhoana V. Alcalde, Gideon P. Carnaje, Maria Angeles O. Catelo

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Abstract

This study is important for improving the effectiveness of microfinance services and ensuring that loans are used in ways that best support borrowers’ needs. It examines the determinants of loan utilization among microfinance borrowers, with how individual, household, and business characteristics, the loan utilization are divided into basic needs, business purposes, and mixed use as explanatory variables. A survey questionnaire was used to collect data from microentrepreneurs of Grameen Pilipinas Microfinance, Inc.

Based on the probit regression results, younger, and married borrowers are more likely to use loans for basic needs, as reflected on their focus on household welfare. While, higher-income individuals and homeowners tend to allocate loans toward business purposes, intended for income-generating investments. Employed borrowers and those with higher education levels are inclined to use loans for mixed purposes, which is inclined to their personal lifestyle. Borrowers with a history of multiple loans borrow for basic needs, while those with extensive business experience are less likely to use loans for mixed purposes, but more on business purposes.

The study underscores the complexity of borrowing decisions, influenced by a combination of socioeconomic factors and individual circumstances. It highlights the need for microfinance institutions to consider these determinants when designing loan products and support services. Tailoring financial products to align with borrowers' characteristics can enhance loan utilization effectiveness and contribute to the sustainability of microfinance initiatives.

Language

English

LC Subject

Microfinance—Philippines, Loan servicing

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2025 E2 M37

Notes

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Document Type

Thesis

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