Perceived Credit Risk of Micro Finance Loans among Micro-enterprises Business in Población Iligan City
DOI:
https://doi.org/10.11594/ijmaber.04.10.22Keywords:
Credit risk, Finance loan, Micro-EnterprisesAbstract
This study aimed to assess the perceived credit risk associated with microfinance loans among micro-enterprise businesses. It had three primary objectives: first, to profile the respondents based on their demographics; second, to gauge their perceptions regarding the credit risk and of the microfinance loans. The research employed a descriptive-correlational research design and was conducted in Brgy. Poblacion, Iligan City, involving a random sample of seventy-five business owners who completed an adapted and modified survey questionnaire. The findings revealed that a majority of the business owners were elderly individuals aged 51 years and older, primarily running cafeteria businesses. Many of these business owners had availed of microfinance loans for their enterprises, and a significant portion had recently experienced this process. It is noteworthy that the majority of micro-borrowers have limited incomes and a lack of substantial credit history. Over time, the microfinance sector has adopted risk mitigation strategies like group lending models and accepting specific collateral types.
Moreover, microfinance institutions have expanded their lending to microenterprises, assessing their creditworthiness based on cash flows. In conclusion, this study suggests that factors such as age, business type, prior loan utilization, and loan experience do not significantly influence individuals' perceptions of credit risk associated with microfinance loans. Thus, other unexplored factors may play a more prominent role in shaping how individuals perceive the credit risk in microloans.
Downloads
References
Aucamp, R.-L. (2014, February 2). The Inci-dental Credit Agreement: A theoretical and practical perspective (1). SSRN. Re-trieved June 19, 2022, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2389226
Chun, O. M., Dionne, G., & François, P. (2014, September 4). Credit spread changes within switching regimes. Journal of Banking & Finance. Retrieved June 1, 2022, from https://www.sciencedirect.com/science/article/abs/pii/S0378426614002763
Dowla, A. U. (2016, November 27). A study on credit risk management and performance of Private Bank in Bangladesh. Academ-ia.edu. Retrieved June 1, 2022, from https://www.academia.edu/30107181/A_Study_on_Credit_Risk_Management_and_Performance_of_Private_Bank_in_Bangladesh
Grippa, P., & Gornicka, L. (2016, August). Measuring concentration risk - a partial portfolio approach. Google Books. Re-trieved June 1, 2022, from https://books.google.com.ph/books?hl=en&lr=&id=ApkYEAAAQBAJ&oi=fnd&pg=PA4&dq=concentration%2Brisk%2Bliterature%2Bmeasuring%2Bconcentration%2Brisk-A%2BPartial%2BPortfolio%2Bapproach&ots=7BLDJq4j9c&sig=hdqpDK806SMmhDHT1f_qj5Y9mfE&redir_esc=y#v=onepage&q&f=false
Hudon, M., & Sandberg, J. (2015, January 23). Business Ethics Quarterly. Cambridge Core. Retrieved June 1, 2022, from https://www.cambridge.org/core/journals/business-ethics-quarterly
Kang, M. (2021, October 29). Suitable for managers, bad for society? Causal. - Wiley online library. Retrieved June 1, 2022, from https://onlinelibrary.wiley.com/doi/abs/10.1111/jbfa.12451
Khavul, S., Susanna Khavul () is an Assistant Professor of Strategic Management and Entrepreneurship in the Department of Management, P., A., C., A., J., A., D., A., B., A. de A., N., A., A., B., J., B., T., B., S., B. G., P., B., P., B., D., B. G., A., C., M., C., A., C., G., C., … Neal, M. (2017, November 30). Mi-crofinance: Creating opportunities for people with low incomes? Academy of Management Perspectives. Retrieved June 1, 2022, from https://journals.aom.org/doi/10.5465/amp.24.3.58
Miled, K. B. H., & Rejeb, J.-E. B. (2015, July 26). Microfinance and poverty reduction: A re-view and synthesis of empirical evidence. Procedia - Social and Behavioral Scienc-es. Retrieved June 1, 2022, from https://www.sciencedirect.com/science/article/pii/S1877042815038185
Monetary policy and credit spread: A new risk-taking channel. (2018, December). Re-trieved June 1, 2022, from https://www.researchgate.net/profile/Rodolfo-Nico-lay/publication/330305203_Monetary_Policy_and_Credit_Spread_A_New_Risk-Tak-ing_Channel/links/5c381edf299bf12be3be40c4/Monetary-Policy-and-Credit-Spread-A-New-Risk-Taking-Channel.pdf
Namvar, A., Siami, M., Rabhi, F., & Naderpour, M. (2018, April 28). Credit risk prediction in an imbalanced social lending environ-ment. arXiv.org. Retrieved June 1, 2022, from https://arxiv.org/abs/1805.00801
Olobo, M., Karyeija, G., Sande, P., & Koch, S. (2021, August 2). Credit risk management practices and performance of commercial banks in South Sudan. Journal of Finan-cial Risk Management. Retrieved June 1, 2022, from https://www.scirp.org/journal/paperinformation.aspx?paperid=111864
Prem, C. (2022, January). The theory of credit contracts: With a focus on group lending. Retrieved June 19, 2022, from https://www.researchgate.net/publication/339126739_The_Theory_of_Credit_Contracts_With_a_Focus_on_Group_Lending
Sidhu, G. (n.d.). Questionnaire FRO Micro Fi-nance Survey. Scribd. Retrieved January 17, 2023, from https://www.scribd.com/document/135087104/Questionnaire-fro-Micro-finance-survey#
Wang, S. (2020). Ohiolink. Retrieved June 1, 2022, from https://etd.ohiolink.edu/apexprod/rws_etd/send_file/send?accession=dayton1428755761&disposition=inline
Downloads
Published
Issue
Section
License
Authors who publish with this journal agree to the following terms:
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See the Effect of Open Access).
