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 out-

standing 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:

 Know the demographic profile of the respondents

 Know the factors affecting their decision to borrow money

 Know the impact of borrowing money to the respondents

 Know the ways they can manage their indebtness

III. 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
Education
factors

Household
Income

Reduced
income
Indebtedness
Divorce

Poor money
management

Under
Causes
employment

Gambling

Medical
expenses

Having little
savings

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