Analysis of the credit needs, sources and repayment performance of agricultural market vendors in Mercado de Calamba, 2016

Date

6-2016

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Salvador P. Catelo

Abstract

The study primarily analyzed the credit needs, sources, and repayment performance of the agricultural market vendors in Mercado de Calamba in one month. Specifically, it 1) described the socio economic characteristics including the net income and credit needs of the vendors 2) examined the factors affecting the credit needs 3) determined the different credit sources and the factors affecting choice of credit source 4) compared the return on investment with the loan repayment rates and interest rates between formal and informal borrowers 5) identified the problems encountered on credit availment and suggest possible solutions. Fifty eight purposively selected market vendors were interviewed using pre-tested questionnaires. The most essential analytical tools in the study were the following: descriptive analysis, multiple linear regression analysis and binomial logistic regression analysis. Despite the high cost of borrowing from private money lenders, they were still found to be the most (71%) accessed credit source in the area because of the past release and convenient borrowing of money. Furthermore, 85 percent of the formal and 51 percent of the informal borrowers had other sources of capital besides credit. In terms of scale of operation, the formal borrowers had Php 89,280. The monthly income of the respondents amounted to Php 13,540 (formal) and Php 13, 181 (informal). Also the household expenses were Php 14, 557 (formal) and Php 13, 568 (informal). These were augmented by their capital requirements which amounted to Php 99, 933 (formal) and Php 76, 098 (informal). Henceforth, it can be deducted which were Php 84, 721 and Php 61,259 respectively. The regression analysis revealed that vendors with other sources of income and higher net business income had lower monthly credit needs. Conversely, as volume of trading increased, monthly credit needs also increased. Furthermore, credit needs and volume of business increased the odds of borrowing from from formal lenders while the length of loan approval decreased the odds of the event. Because more formal borrowers properly, used their credit for business purposes than the informal borrowers, the former (98.67 percent) had a slightly higher repayment rate than the latter (97.53 percent). All businesses were also found to be profitable since they had positive returns on investment. However, the ROI values of the meat and fish vendors were low (less than 10%) thus they did not get a good return out of their cost. Based from the findings of the study, the following were recommended efficient capital allocation proper credit utilizations adoption of loan utilization monitoring system reasonable prices and improvement of formal lenders services (e.g. fastest approval and release of loans and simple loan application procedures.)

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2016 A14 S47

Document Type

Thesis

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