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Contingent Loan Repayment in the Philippines

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Author Info
Marcel Fafchamps () (Centre for the Studies of African Economies, University of Oxford)
Flore Gubert () (DIAL, IRD, Paris)

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Abstract

(English) This paper examines credit repayment among rural Filipino households , using survey data collected in four villages in the Cordillera mountains of northern Philippines between July, 1994 and March, 1995. We find that the timing of loan repayment depends on shocks affecting lender and borrower but amounts repaid and debt forgiveness do not. Borrowers occasionally repay debt in labor when faced with a bad shock. Contractual interest charges often are reduced ex post but reductions do not depend on shocks except through the timing of repayment. We find no evidence of loan roll-over, debt peonage, or labor bonding. _________________________________ (français) Cet article examine les pratiques d’un échantillon de ménages ruraux en matière de remboursement de crédit, à partir de données collectées aux Philippines. L’analyse économétrique montre que les chocs subis par l’emprunteur et son créancier exercent une influence significative sur la durée de l’emprunt, mais qu’ils sont sans effet sur le montant du remboursement ni sur la probabilité que l’emprunteur bénéficie d’une remise de dette. Par ailleurs, les emprunteurs ayant subi les désagréments d’un choc tendent à rembourser leurs prêts en travail plutôt qu’en argent. Les intérêts versés sont souvent moindres que les intérêts dus ex post, mais ne sont pas directement influencés par les variables de choc. Enfin, les phénomènes d’asservissement des emprunteurs ou de surendettement ne sont pas observés dans la zone d’étude.

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Paper provided by DIAL (Développement, Institutions & Analyses de Long terme) in its series Working Papers with number DT/2002/14.

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Length: 31 pages
Date of creation: Nov 2002
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Handle: RePEc:dia:wpaper:dt200214

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Related research
Keywords: Prêts informels remboursements contingents modèles de durée Informal loan contingent repayment duration models

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Find related papers by JEL classification:
G19 - Financial Economics - - General Financial Markets - - - Other
K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Working Papers DT/2005/13, DIAL (Développement, Institutions & Analyses de Long terme). [Downloadable!]
    Other versions:
  2. Marie Godquin & Manohar Sharma, 2005. "If only I could borrow more! Production and consumption credit constraints in the Philippines," Cahiers de la Maison des Sciences Economiques bla05008, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
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