Assessing mandated credit programs: case study of the Magna Carta in the Philippines

Jacildo, Ryan; Khor, Niny; Tacneng, Ruth

Publication

Assessing mandated credit programs: case study of the Magna Carta in the Philippines

2016Journal article

dc.contributor.author	Jacildo, Ryan
dc.contributor.author	Khor, Niny
dc.contributor.author	Tacneng, Ruth
dc.date.accessioned	2018-06-29T12:15:25Z
dc.date.available	2018-06-29T12:15:25Z
dc.date.issued	2016
dc.description.abstract	We examine the effects of a mandated credit program to small and medium enterprises in the Philippines (Magna Carta Law) using a panel dataset compiled from official data published by the Bangko Sentral ng Pilipinas. The final sample of 109 financial institutions represented over 90% of total finance sector assets in the Philippines. We highlight three important findings. First, although the total lending levels to micro, small, and medium enterprises (MSMEs) grew slightly, the percentage shares of loans allocated to MSMEs declined drastically from a peak of 30% of total loans in 2002 to 16.4% in 2010. Second, following the upwards revision of the loan target (from 6% to 8%) for smaller firms in 2008, there was a sharp increase in noncompliance especially amongst universal and commercial banks. On the other hand, total loans to medium enterprises were still more than threefold larger than the targeted 2%. Third, there is an increased heterogeneity in optimal loan portfolio across banks. Most surprisingly, the absolute level of MSME lending by rural and cooperative banks declined since 2008. Direct compliance amongst universal and commercial banks decreased beginning in the late 2007, while that of thrift banks increased to almost 100%. Abolishing the Magna Carta targets for medium-sized enterprise loans would most likely yield little adverse effects. Meanwhile, efforts to improve financial access to MSMEs should focus on alternative nondistortionary ways to increase financing supply, such as improving institutional framework for informational availability and development of equity and bond markets for MSMEs.	pt_PT
dc.description.version	info:eu-repo/semantics/publishedVersion	pt_PT
dc.identifier.citation	Jacildo, R., Khor, N., Tacneng, R. (2016). Assessing Mandated Credit Programs: Case Study of the Magna Carta in the Philippines. Journal of Governance and Regulation, 5(3), 34-49	pt_PT
dc.identifier.doi	10.22495/jgr_v5_i3_p5	pt_PT
dc.identifier.issn	2306-6784
dc.identifier.uri	http://hdl.handle.net/10400.14/25143
dc.language.iso	eng	pt_PT
dc.peerreviewed	yes	pt_PT
dc.publisher	Virtus Interpress	pt_PT
dc.rights.uri	http://creativecommons.org/licenses/by-nc/4.0/	pt_PT
dc.subject	Financial Inclusion	pt_PT
dc.subject	Financial Markets	pt_PT
dc.subject	Financial Policy	pt_PT
dc.subject	Philippines	pt_PT
dc.subject	SME	pt_PT
dc.subject	Targeted Lending	pt_PT
dc.title	Assessing mandated credit programs: case study of the Magna Carta in the Philippines	pt_PT
dc.type	journal article
dspace.entity.type	Publication
oaire.citation.endPage	49	pt_PT
oaire.citation.issue	3	pt_PT
oaire.citation.startPage	34	pt_PT
oaire.citation.title	Journal of Governance and Regulation	pt_PT
oaire.citation.volume	5	pt_PT
person.familyName	Tacneng
person.givenName	Ruth
person.identifier.orcid	0000-0003-3372-2897
rcaap.rights	openAccess	pt_PT
rcaap.type	article	pt_PT
relation.isAuthorOfPublication	0856d3f5-2566-4345-866e-61a66ec74e85
relation.isAuthorOfPublication.latestForDiscovery	0856d3f5-2566-4345-866e-61a66ec74e85