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Contingent Loan Repayment in the Philippines

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  • Marcel Fafchamps

    ()
    (Centre for the Studies of African Economies, University of Oxford)

  • Flore Gubert

    ()
    (DIAL, IRD, Paris)

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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Bibliographic Info

Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2002/14.

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

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

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Citations

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Cited by:
  1. Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Economics Series Working Papers GPRG-WPS-037, University of Oxford, Department of Economics.
  2. Landmann, Andreas & Vollan, Björn & Frölich, Markus, 2011. "Saving, Microinsurance: Why You Should Do Both or Nothing. A Behavioral Experiment on the Philippines," Proceedings of the German Development Economics Conference, Berlin 2011 51, Verein für Socialpolitik, Research Committee Development Economics.
  3. 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).

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