Credit utilization and loan repayment performance of member-borrowers of the Kadre Development Cooperative in Pinagbayanan Laur Nueva Ecija, 2011

Date

4-2012

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Marilyn M. Elauria

Committee Member

Ma. Eden S. Piadozo, Corazon L. Rapera

Abstract

This study was primarily conducted to analyze the credit utilization and repayment performance of the borrowers of KADRE Development Cooperative in Pinagbayanan, Laur, Nueva Ecija. The study utilized both primary and secondary data. Primary data covering the period January to December 2011 were gathered through face-to-face interviews of 48 farmer-borrowers using pre-tested interview schedules. The sample farmer-borrowers were selected using complete enumeration. Secondary data were collected from the KADRE Development Cooperative. Tabular and descriptive analysis was employed to describe the farmer-borrowers of the KADRE Development Cooperative. It was also be used to assess their credit utilization and loan repayment, the variables in the regression model, as well as the problems encountered by them. Analytical tool employed in the study was multiple regression analysis and Likert scale. On the average, these 48 farmer-borrowers were neutral when it comes to their disposition on perceptions regarding credit. Rice and onion farmers exhibit the highest percentage of loan allocated to intended purpose. On the other hand, rice farmers exhibit the lowest percentage. This can be attributed to the fact that the second cropping season is characterized by typhoon destructions that’s why they have decided not to utilize the loans fully on the intended purpose. Generally, the farmer-borrowers of KADRE Development Cooperative have allocated 88.32% of the loans granted to their intended purpose. With regards to their loan performance, no one from the 48 farmer-borrowers paid fully. Rice farmers exhibited lowest percentage of loan repayment rate. This is due to the damage caused by storm during the second cropping season. The event led to a lower income of the farmers that made it hard for them to repay their loans. On the other hand, the onion farmers showed evidence of having the highest percentage amounting up to 81%. At the end of the year, the farmer-borrowers had managed to allocate 88.32% of the total loans granted, and they still had an outstanding loan amounting to P2,112,400.00. Multiple regression was used to determine the relationship and effect of selected explanatory variables on their loan utilization and repayment. Two set of models were used. The first one which incorporated all the explanatory variables, showed that the number of trainings and seminars attended was significant at 5%, but has a negative relationship with credit utilization. This implies that a farmer-borrower with higher number of trainings and seminars attended will have lower credit utilization. Twenty-seven (27) out of the 48 farmer-borrowers reported that for them, the trainings and seminars conducted were not beneficial; hence, even a higher number of trainings and seminars attended did not yield a positive relationship with their credit utilization. The same result was found when the second model was used. This did not include the farm and nonfarm incomes, which was however, tested only for repayment rate. Other explanatory variables were no longer tested for loan repayment because it was already tested on credit utilization. Only the first model exhibits a significant variable for loan repayment. Land area has a negative coefficient which implies that farmer-borrowers with higher land area have lower repayment rate. About 79% of the farmer-borrowers interviewed indicated that typhoons especially on the second cropping season were making their decision riskier. Relatively, a larger farm size indicates a riskier decision because of higher chance of production loss, which was one of the main reasons for a farmer-borrower’s non-repayment. It was also observed that credit utilization does not significantly affect the loan repayment at any level. Other problems encountered by the farmer-borrowers include: unexpected household expenses, lack of collector, incapability to budget the bulk of money given to them at the start of the cropping season, and low and/or delayed harvest. Based on the results of the study, the following recommendations are suggested: (1) the cooperative and the Land Bank of the Philippines should improve their way of presenting and the content of their seminars and trainings in a way that it will be beneficial to their member-borrowers. They should also encourage and be stricter on their member-borrowers’ attendance on seminars and trainings; (2) the cooperative then, must continuously introduce new farm techniques such as use of more resistant varieties of rice (e.g. drought-resistance and diseases); (3) the cooperative should improve their collection scheme and disciplinary actions towards their borrowers; (4) they should also allot collectors for every borrower which may increase the cooperative’s loan collection; and (5) should also introduce short-maturing varieties to avoid delayed or late harvest.

Language

English

Call Number

Thesis

Document Type

Thesis

This document is currently not available here.

Share

COinS