Credit stability in the Philippines: A market to country level approach

• Main Authors: Tan, Annary D., Tan, Laurence Andre P., Valencia, Sonny Angelo O.
• Format: text
• Language: English
• Published: Animo Repository 2014
• Subjects: Credit > Philippines; Credit > Management; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6846
• Institution: De La Salle University

The study was in-depth analysis of the stability of the credit market in the Philippines. Using vector autoagression (VAR), the study checked the credit variables, specifically consumer loans that affect the market as a whole. It also studied how the market reacts to fluctuations in these variables through an imposition of an impulse response. The shocks helped the researchers understand how resilient the credit market in the country to credit volatility. Additional analysis was conducted to check whether the credit market has a strong influence in the Philippine economy. Quarterly (2002Q1-2011Q4) data of the variables in the study was sourced from the Asian Development Bank (ADB), International Monetary Fund (IMF), Bangko Sentral ng Pilipinas (BSP), and Colliers International Philippines. Results showed that the credit stability at the market level in terms of risk premium is affected by shocks in credit card loans, auto loans and in the capital adequacy ratio. Conversely, the country model reflected that credit shocks do not significantly affect the productivity of the economy.