Mandatory Credit Allocation and Government Guarantee in the Philippines

Mandatory credit allocation is a policy intervention to pressure banks to lend to certain sectors that otherwise unfettered finance would not give access to. While some would argue that mandatory credit allocation results in sub-optimal allocation of resources, it has been shown that such interventi...

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Main Author: Dumlao, Luis F
Format: text
Published: Archīum Ateneo 2024
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Online Access:https://archium.ateneo.edu/economics-faculty-pubs/217
https://archium.ateneo.edu/context/economics-faculty-pubs/article/1219/viewcontent/4322_48_63.pdf
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id ph-ateneo-arc.economics-faculty-pubs-1219
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spelling ph-ateneo-arc.economics-faculty-pubs-12192024-07-16T08:27:10Z Mandatory Credit Allocation and Government Guarantee in the Philippines Dumlao, Luis F Mandatory credit allocation is a policy intervention to pressure banks to lend to certain sectors that otherwise unfettered finance would not give access to. While some would argue that mandatory credit allocation results in sub-optimal allocation of resources, it has been shown that such intervention results is socially desirable outcome. However, mandatory credit allocation should not be the responsibility of banks only, it must be supported with government guarantees. In the Philippines, there are three sectors in which mandatory credit allocation is given namely the agriculture sector, the micro, small and medium enterprises or MSME sector, and enterprises involved in innovation. In agriculture, the credit allocation is too big and therefore should be reviewed, in MSME too small and therefore should also be reviewed, and in innovation difficult to identify and impractical to implement. In all of these, the banks are left to shoulder the respective mission with practically no government support. Banks either comply or pay the penalty. 2024-04-30T07:00:00Z text application/pdf https://archium.ateneo.edu/economics-faculty-pubs/217 https://archium.ateneo.edu/context/economics-faculty-pubs/article/1219/viewcontent/4322_48_63.pdf Economics Department Faculty Publications Archīum Ateneo bank lending credit rationing financing agriculture financing innovation financing micro Philippines small and medium enterprises (msme) finance Business Economics Social and Behavioral Sciences
institution Ateneo De Manila University
building Ateneo De Manila University Library
continent Asia
country Philippines
Philippines
content_provider Ateneo De Manila University Library
collection archium.Ateneo Institutional Repository
topic bank lending
credit rationing
financing agriculture
financing innovation
financing micro
Philippines
small and medium enterprises (msme) finance
Business
Economics
Social and Behavioral Sciences
spellingShingle bank lending
credit rationing
financing agriculture
financing innovation
financing micro
Philippines
small and medium enterprises (msme) finance
Business
Economics
Social and Behavioral Sciences
Dumlao, Luis F
Mandatory Credit Allocation and Government Guarantee in the Philippines
description Mandatory credit allocation is a policy intervention to pressure banks to lend to certain sectors that otherwise unfettered finance would not give access to. While some would argue that mandatory credit allocation results in sub-optimal allocation of resources, it has been shown that such intervention results is socially desirable outcome. However, mandatory credit allocation should not be the responsibility of banks only, it must be supported with government guarantees. In the Philippines, there are three sectors in which mandatory credit allocation is given namely the agriculture sector, the micro, small and medium enterprises or MSME sector, and enterprises involved in innovation. In agriculture, the credit allocation is too big and therefore should be reviewed, in MSME too small and therefore should also be reviewed, and in innovation difficult to identify and impractical to implement. In all of these, the banks are left to shoulder the respective mission with practically no government support. Banks either comply or pay the penalty.
format text
author Dumlao, Luis F
author_facet Dumlao, Luis F
author_sort Dumlao, Luis F
title Mandatory Credit Allocation and Government Guarantee in the Philippines
title_short Mandatory Credit Allocation and Government Guarantee in the Philippines
title_full Mandatory Credit Allocation and Government Guarantee in the Philippines
title_fullStr Mandatory Credit Allocation and Government Guarantee in the Philippines
title_full_unstemmed Mandatory Credit Allocation and Government Guarantee in the Philippines
title_sort mandatory credit allocation and government guarantee in the philippines
publisher Archīum Ateneo
publishDate 2024
url https://archium.ateneo.edu/economics-faculty-pubs/217
https://archium.ateneo.edu/context/economics-faculty-pubs/article/1219/viewcontent/4322_48_63.pdf
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