In-depth Analysis on the Access to and Suitability of the Loans

This paper analyzes access to and suitability of loans of the community oriented financial intermediary (COFI) from the households perspective. It is part of a series of studies on microfinance development in the Philippines using a household perspective.

The study reinforces the significance of using a household approach in evaluating the effects of microfinance. Findings include:

• Effects of credit in household income and expenses are positive and statistically significant;
• Clients of COFIs, on average, experience greater positive effects than non-clients;
• Non-clients allot a greater percentage of their loans in proportion to their income on food and non-food consumptions;
• Access to COFI loans is relatively easy for the clients since the requirements and processing are fast and reasonable;
• COFIs rarely disapprove loan applications and if there are numbers of pending loan applications, they usually reduce the amount of loan approved instead of disapproving the application;
• COFI loans reasonably suit the needs of clients;
• COFIs play an important role in providing a reliable source of credit to members who are constrained by the stringent requirements imposed by the banking system.