Collateral Substitutes: Effect on Loan Access and Size in the Philippine Informal Credit Markets
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Date
1996-07
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Publisher
Ohio State University. Department of Agricultural, Environmental, and Development Economics
Abstract
Collateral substitutes, such as interlinked contracts and reputation, are econometrically shown to affect loan access and size from informal lenders in the Philippines. Greater access and larger sized loans from fanner lenders were influenced by borrower reputation and land links while from trader lenders by business relations and product links. The specialization of borrowers in farm and non-farm activities and specialization of lenders in farming and trading is observed to influence their preferences for interlinked type collateral substitutes. As a result, systematic differences in loan access and size were found for loans received by different types of borrowers from different types of lenders.