CBMS-12912 Credit Risk Factors and Access to Finance: Evidence from the CBMS Philippine Entrepreneurship


Access to debt finance can be explained by capability to pay of the borrower. Although the cost of funding and funding availability of borrower’s capital requirement are important, the paper validates that access to debt finance can be equated to a borrower’s capability to pay. As a derivative function of housing characteristics, demography, education, share of income, business and unemployment skills and economic skills, the inherent characteristics of the borrower fundamentally direct its supply and demand of debt capital. Using the Community Based Monitoring(CBMS) as core data, a three stage methodology has been implemented. Initial regression results show that business assets are major risk factors positively charging access to debt finance or the capability to pay of the borrower. Business assets provide solid collateral to guarantee borrowing and hedge against borrower default. Similarly, the occurrence of bank loans is anchored on the collateral of the borrower. As access to debt finance been found significant to total sales performance of entreprenuers, results also establish that entreprenuers with access to bank loans have improved total family income and business assets as well. As such, the paper calls for examining alternative sources of collateral or guarantees for micro and small medium entreprises (MSME)’s debt financing; empowering resource stewardship and risk management skills at the household level and championing a need for a credible source of information through a credit exchange bureau or comprehensive database center solely for MSME’s.


Project leader: Junette Perez

Project researchers:

Journal publication

Authors Co-Authors Title of paper Title of Economic Review Bibliographic references
Junette A. Perez Denmark C. Alarcon, Mar Andriel S. Umali Determining the Credit Risk Factors in Accessing Debt Financing for Entrepreneurial Actvities DLSU Business & Economics Review

Volume 27, 2017, pages 89-96

Working Papers

Title Modified Size Comments Recommendations
Determining the Credit Risk Factors in Accessing Debt Financing for Entrepreneurial Activities 2017-07-06 3919.53KB 0 0

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