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Contingent Loan Repayment in the Philippines

  • Marcel Fafchamps


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

  • Flore Gubert


    (DIAL, IRD, Paris)

(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 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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  13. Kocherlakota, Narayana R, 1996. "Implications of Efficient Risk Sharing without Commitment," Review of Economic Studies, Wiley Blackwell, vol. 63(4), pages 595-609, October.
  14. Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Working Papers DT/2005/13, DIAL (Développement, Institutions et Mondialisation).
  15. Morduch, J., 1995. "Income Smoothing and Consumption Smoothing," Papers 512, Harvard - Institute for International Development.
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  19. Andrew D. Foster & Mark R. Rosenzweig, 2001. "Imperfect Commitment, Altruism, And The Family: Evidence From Transfer Behavior In Low-Income Rural Areas," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 389-407, August.
  20. Udry, Christopher, 1990. "Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy," World Bank Economic Review, World Bank Group, vol. 4(3), pages 251-69, September.
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  29. Platteau, J.P., 1996. "Traditional Sharing Norms as an Obstacle to Economic Growth in Tribal Societies," Papers 173, Notre-Dame de la Paix, Sciences Economiques et Sociales.
  30. Fafchamps, Marcel, 1996. "The enforcement of commercial contracts in Ghana," World Development, Elsevier, vol. 24(3), pages 427-448, March.
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  34. repec:tpr:qjecon:v:110:y:1995:i:4:p:1011-46 is not listed on IDEAS
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