Revised-chapter-1.docx

THE FACTORS THAT CONTRIBUTES TO THE LOANING ACTIVITY OF FAMILIES IN DASMARINAS CAVITE

A research presented to the Senior High School Faculty De Lasalle Univesity- Dasmarinas Dasmarinas Cavite

Baraoidan, Gella Neil Bisa, Anna Sheraldine Briones, Alyza Mae Mercado, Kathleen Oftana, Rosslare Rabacal, Sophia Marie

February 2019

CHAPTER 1 INTRODUCTION

I.

Background of the Study Debt is an amount of money borrowed by one party from another (Chen, 2018). Furthermore, as stated by Yee, debt is being experienced and viewed negatively by most Filipinos. According to Lemke (2018), the simplest explanation is that debt

happens when a person spends more than he/she earn, such as buying things that are not necessary, bad planning and overusing credit cards. There are seven causes why people get into debt which includes reduced income, divorce, poor money management, under employment, gambling, medical expenses and having little savings (Bennet, 2019). According to Chipongian (2018), the Consumer Expectation Survey (CES) recently said the number of Filipino households with debt or loans have increased to 43.3 percent during the quarter versus the previous quarter’s 27 percent. Of the total surveyed, 709 households in the National Capital Region (NCR) have “debt situation” while a higher 1,005 households in areas outside of the NCR have loans. “Almost one-third (or 31.7 percent) of the respondents declared that he/she and/or his/her spouse have an outstanding loan at present,” mentioned by the Bangko Sentral ng Pilipinas. Based on the survey, the entire principal debt was lower at 1120.16 million from the second quarter’s total of 1167.06 million. On the other hand, the average of amount of principal loan of respondents and/or spouse dropped to 159,901 compared to 169,063 in the previous quarter. Based on the

survey conducted by Manulife Investor Sentiment Index (ISI), the mean debt level of Filipinos aged 35-49 that have families is P 207,428. Apart from daily living expenses, a large share of the debt incurred by Filipinos represent outlays for their children’s education, medical expenses and discretionary expenses, indicating the relevance of wealth management products to help in wealth accumulation and disciplined financial management. Loaning activities are present in the Philippines especially in Cavite. According to the Philippine Lifestyle News (2015), Indian money lenders were caught in Cavite collecting debts from people who are involved in these activities. This proves that money lending in Cavite is currently operating by foreigners or Filipinos. Money lending includes interests that are increasing as time goes by that eventually turns into bad debts. According to Gawad Kalinga (2018), new houses were built in Dasmarinas Cavite as one of the helps they can give to the families living in the community. There are some families in Dasmarinas who suffers from low income making them unable to buy or rent houses. This proves that there are families in Dasmarinas that are capable of being involved in loaning activities and can trigger them to have debts. There are few studies that tackles about the factors of debt but there are almost no study present that tackles about the factors of debt of people living in Dasmarinas Cavite. This study tends to focus on what aspect is the borrowers' top priority when spending the money they loaned instead of focusing on the effects of debts in a household.

II.

Statement of the Problem Families in Villa Isabel Dasmarinas Cavite suffer from debts because of many reasons. Generally, this study aims to know the pinnacle reason on why they are loaning money from money lenders. There is an abundant number of possible rationales on why families chose to borrow money. This study specifically aims to:

III.



Know the demographic profile of the respondents

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Know the factors affecting their decision to borrow money

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Know the impact of borrowing money to the respondents

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Know the ways they can manage their indebtness

Objectives of the Study This study aims to determine the reasons behind the debts and how families from Villa

Isabel, Dasmariñas, Cavite come up with their priorities in spending money. Morever, this study aims to: 1. Know the demographic profile of the respondents from Villa Isabel, Dasmariñas Cavite 1.1 Determine their age, gender, education attainment and occupational 2. Know the factors that the residents consider in borrowing money 2.1 Determine the priorities of the residents in spending money 2.2 Determine if the residents borrow money 2.3 Determine the reasons why they borrow money 3. Know how the respondents manage their indebtness

3.1 Determine whether they are able to pay their debt or not 3.2 Determine how they are able to pay their debt

IV.

Significance of the Study Knowing what triggers the debts of the families in Dasmarinas can help the families

identify what aspect in their life they prioritize the most. Some priorities might be health, luxuries, education or leisure. A lot of studies showed the effects of having debt in the families and what triggers them to have debts. The findings of this study will determine the top priority of the families in Dasmariñas, Cavite for them to be fully aware on their priorities in spending money. Furthermore, this study will suggest better ways in handling money and avoiding debts in order to align them with their priorities. In this study, future researchers will also benefit from it. It will be easier for them to conduct a research in Dasmarinas about family debts especially to De Lasalle University Dasmarinas students who are nearby the researched area.

V.

Scope and Delimitation/Limitation This study will mainly focus on knowing the demographic profile and the factors

affecting the decisions in borrowing of money of the residents from Dasmariñas, Cavite. This study will depend on a concrete and specific data that is gained through precise and detailed methods of collection such as questionnaires and surveys. This will let the residents to freely share their insights, and answers to the questionnaire related to debt. In addition, this will help the residents regarding debt by suggesting ways in coping up with

debt and betterment of spending money which will be based on their answers on the questionnaires.

VI.

Ethical Considerations In the case of studying the reasons why families do have debts in Dasmariñas,

Cavite. The ethical considerations are that the research participants dignity should be respected. The participant’s own decisions on whether they would participate or not should also be respected. The full consent of the participant’s and their parents should be obtained prior to the study. The participant’s privacy and their individual organizations should be protected and be kept confidential. Any exaggerations or false information about the objective of the research must be avoided. Any type of communication related to the study must be done honestly and should not have any biased or misleading information about the related topic. The works of other researchers that will be used as references will be acknowledge.

Conceptual Framework This study espouses the idea that the demographic profile of the respondents is a big factor of their indebtedness. This study also implies that there are seven causes of why people get into debt, in accordance to Bennet, 2019, which are reduced income, divorce, poor money management, underemployment, gambling, medical expenses, and having little savings. For example, if a family has a low household income and the respondent has no education attainment, there might be a possibility that the respondent might not be able to get a job or might get a job which is on the minimum wage. Furthermore, situations like this attributes to the causes of debt. These are illustrated in Figure 1.

Age Demographic factors

Education Household Income Reduced income

Indebtedness Divorce Poor money management Causes

Under employment Gambling Medical expenses Having little savings

Figure 1: This diagram shows the demographic factors and causes that affects indebtedness