CHAPTER I

INTRODUCTION

Background of the Study

Cooperatives are business enterprises that are owned by a group of individuals working

for same benefits. Cooperative go a step further by organizing cooperation, sharing of resources

and mutual return of labor. The cooperatives find its roots in multiple influences and locations

worldwide. Cooperatives at the end of 20th century revised its accounting system for the purpose

of recognizing the growth of economic importance of cooperatives (Becker, 2010).

According to the study of Dave Grace and Associates 2014 cited in Global Census on

Cooperatives which focused on gathering data so that future research can be conducted on

impact of cooperatives in region, cooperatives globally are providing value to their members.

Cooperatives also make up in Social Progress Index which includes human needs, opportunities

and access to knowledge.

Cooperative researches have been conducted in universities, institutes and co-op

organizations. In countries such as India, Japan and Korea national societies for co-operative

studies were organized to coordinate research efforts but their focus had been mostly domestic

and there is little exchange among them except for Japan and Korea. The agricultural economics

had been the predominant discipline since most of the region had been relied on agriculture, but

the industrialization needed to involve other disciplines such as management and marketing,

sociology, history, finance and so on in co-operative research. Multipurpose agricultural co-ops

(Japan and Korea) provide members with functions that cover all aspects of farmer’s life; from

supply and marketing to credit and insurance, from hospitals and clinics to nursing homes and

funeral services, from housing and property management to filling stations and propane gas

supply etc. This has help promote rural development through providing infrastructure for
 2

agriculture and farmer’s daily life, but it could still not solve the structural problems of

increasing deficits in economic functions offset by surpluses in financial ones (Akira Kurimoto

Director, CCIJ, 2011).

In the Philippines, Cooperatives play vital role in improving economic and social status of

its members. The declared purpose of the law governing cooperatives (Republic Act 6938, also

known as the Cooperative Code of the Philippines) is to foster the creation and growth of

cooperatives. Cooperatives are classified into four - micro, small, medium and large.

Cooperatives in the Philippines focuses on the less-privileged members of our society and are

tasked to put them in a socio economic mainstream so that they will become an active player in

the nation building. According to Dr. Castillo, cooperatives provides technical assistance

program. It would bring a lot of economic benefits to its members and the country as well (The

Philippine Star, 2015).

In Pangasinan, lot of cooperatives are established, some are not profit-oriented but non-

profit service oriented cooperatives which aims to help employees and other beneficiaries to

have a better life. Calasiao Plant Cooperative in Calasiao, Pangasinan is one of the cooperatives

which is non- profit oriented.

Calasiao Plant Cooperative is established in 1987 as non-profit employees’ credit

cooperative. The Calasiao coop is duly registered with the Cooperative Development Authority

(CDA), a government regulatory agency.

The cooperative has objectives to: 1. Promote value of saving for the future among

members 2. Help members avail of credit facility with very low interest rate to finance their

family 3. To keep employees from being victimized by usurious lending including “5-6” and

other lending groups that charge high interest.

 3

The Calasiao Plant Cooperative has a vision of being a model and world-class

cooperative committed to provide excellent financial services to its members for better quality

of life, and has a mission to achieve its vision, the cooperative commits to promote the value of

saving for the future, to use money productively to secure financial stability of the cooperative

thru good governance and product management of its financial resources and lastly to show care

and concern to its members, employees and the community.

Being a member of the cooperative can save money without noticing as it is deducted

thru payroll. The savings will also earn high interest, which is much higher than that of a bank

or other similar institutions.

One of the offers of the Calasiao Plant Cooperative is the Multi-Purpose Loan for

employees with less than (1) year of regular service. The maximum loanable amount is based

on their available Net Disposal Income (NDI) and the maximum payment term is one year only.

It is required to have a 3 co-makers with at least 1 year in service. Second is for employees with

at least 1 year up to 3 years in regular service, the maximum loanable amount is also based on

their available Net Disposal Income. The maximum payment term is 3 years only. One co-maker

is required for every P25 000 but minimum of 3 co-makers.

Calasiao Plant Cooperative is a multi-awarded Cooperative for its outstanding

performance duly recognized by the Cooperative Development Authority with the registration

number 9520-01000143.

Multi-Purpose loans really serve as a way of improving in lives of a cooperatives’

members, but it is normal for it to encounter several problems and challenges.

 4

With this study, it intends to proposed measures/intervention or recommendations to

improve the utilization of multipurpose loan of members of Calasiao Plant Cooperative and

improve their socio-economic status.

Conceptual Framework

The researchers utilized the Input-Process-Output Model. This model is scrutinized as a

process of a series of processing elements connected by input and output. The information flows

through a series of activities based on a set of rules. Flowcharts and process diagrams are

commonly used to represent the process.

This descriptive survey research through a questionnaire serves as data gathering

instruments. The process includes questionnaire formulation, floating retrieving and tabulation.

Paradigm of the Study

The paradigm is organized in a way that states how the study is regulated and search

objectives were achieved. Figure. 1. Paradigm of the study was reflected in the Input Process

Output Model.

The first part of the paradigm of the study is the input which reflects the variables to be

measured particularly those mentioned in the research title, majir problems and sub problems.

INPUT box provide demographic profile of the member of Calasiao Plant Cooperative which

includes age, gender, and years as member and the difference between the effects of multi-

purpose loan to their socio-economic status.

PROCESS box indicates survey questionnaire to the mentioned members of Calasiao

Plant Cooperative. OUTPUT states the propose measures that can be recommended to improve

utilization of multi-purpose loan.

 5

Figure 1
Paradigm of the study
 6

Statement of the Problem

The study aims to determine the effects of multi-purpose loan to the members of Calasiao

Plant Cooperatives.

Specifically, it seeks to determine the following sub-problems:

1.) What is the profile of the members of Calasiao Plant Cooperative who availed multi-

purpose loan in terms of:

a. Age

b. Gender

c. Years as Member

2.) What are the effects of multi-purpose loan to the members of Calasiao Plant Cooperative

in terms of:

a. Social Status

b. Economic growth

3.) Is there a significant difference between the effects of multi-purpose loan to the members

of Calasiao Plant Cooperative along with their profile?

4.) Based on findings, what proposed measures/interventions can be recommended to

improve the utilization of multipurpose loan of members of Calasiao Plant Cooperatives and

improve their socio-economic status?

 7

Hypothesis

That there is significant difference between the effects of multi-purpose loan to the

members of Calasiao Plant Cooperatives along with their profile.

Scope and Delimitation

This study is focused on the effects of multi-purpose loan of Calasiao Plant Cooperative

to its members. The respondents will be 60 members of the actual number of members of

Calasiao Plant Cooperative who are willing to answer questionnaires. This study used

descriptive method of survey, with questionnaire as the main instrument to gather the needed

data.

To ensure high percentage of questionnaires retrieval, the researchers personally conducted

and assisted the respondents. The data acquired were tabulated and analyzed using frequency

counts and percentages.

The study is also restricted to the agreement that the researchers have made with the

management of the Calasiao Plant Cooperative to ensure confidential information were secured.

Lastly, the data collected were acquired and limited to members willingly accepted our

requests to answer and provide insights to our questionnaires.

 8

Importance of the Study

The achievement of this research is important not only to the researchers but also

contributes for the benefit of the following:

Calasiao Plant Cooperative. This benefits the management in determining the effects

of multi-purpose cooperative, its effectiveness and necessary improvements to its members.

Members from Calasiao Plant Cooperative. The study will help in terms of

broadening the member’s knowledge about the effects of multi-purpose loan in their socio-

economic status.

PhilCST College of Accountancy and Business Program. This study helps the

College of Accountancy and Business Programs in terms of giving additional knowledge about

the knowledge, effects and impact of multi-purpose cooperative to society, economic growth

and its members.

PhilCST College of Accountancy and Business students. As an accountancy student,

it helps widened knowledge about multi-purpose loans from cooperative. Also, it developed

leadership skills and competencies and improved time management skills.

Future researchers. Future researchers may consider and may address the effectiveness

of multi-purpose cooperative employed by Calasiao Plant Cooperative in Calasiao, Pangasinan

as another line of study or may serve as a guide and basis for their future researches.
 9

Definition of Terms

For the better understanding of the study, the researchers gave several terms that were

defined conceptually and operationally as used in the study.

Cooperative. Autonomous association of persons united voluntarily to meet their

common economic, social and cultural needs and aspirations through jointly owned enterprise.

Cooperative Development Authority. Government agency which promotes viability

and Growth of cooperatives in the Philippines as instruments of equity, social justice and

economic development.

Economic growth. Increase in market value of assets and income.

Multipurpose Loan. A loan which provides financial assistance to qualified members

of a cooperative.

Social Status. Relative level of respect, honor and deference accorded to people, groups

and organizations in the society.