Impact of informal money lending to the micro-entrepreneur

A Research Study

Presented to the

Faculty of the Senior High School

Pardo National High School

A. Gabuya Sreet, Poblacion Pardo, Cebu City

In partial fulfillment

of the requirements in Senior High School

Grade 12 - Inquiries, Investigation, and Immersion

By:

JENESIA T. RICO

BLOSSOM MAE B.EMPERADO

SAINDELYN YBIERNAS

ANDRY E. REPASA

2018 - 2020

APPROVAL SHEET
 This research study entitled, THE ______ , submitted by ROSEJANE S. DICDIQUIN
in partial fulfillment as Grade 12 Senior High student has been examined and is
recommended for acceptance and approval for ORAL EXAMINATION.

ROSEJANE S. DICDIQUIN,M.Ed.
Subject Teacher
SHS Coordinator

THE THESIS COMMITTEE:

MARIA AURORA V. MANGAPIS,MS-Biology

Research Teacher
Chairman

LEONORA I. MICAME,MA.Ed. FERNANDO G. BOLO,M.Ed.

Research Teacher Research & Chemistry Teacher
Member Member

ACCEPTED AND APPROVED for ORAL EXAMINATION.

MARIA AURORA V. MANGAPIS,MS-Biology

Research Teacher
PANEL OF ORAL EXAMINERS
 Approved by the Committee on Oral Examination with a grade of PASSED.

MARIA AURORA V. MANGAPIS,MS-Biology

Research Teacher
Chairman

LEONORA I. MICAME,MA.Ed. FERNANDO G. BOLO,M.Ed.

Research Teacher Research & Chemistry Teacher
Member Member

ACCEPTED AND APPROVED in partial fulfillment of the requirements as Grade

12 student in Inquiries, Investigation, and Immersion.

MARIA AURORA V. MANGAPIS,MS-Biology

Research Teacher
Chairman

Oral Examination : ___________________

Book Submission : ___________________

ACKNOWLEDGEMENT
 The Researcher
DEDICATION
This piece of work is lovingly dedicated to
 TABLE OF CONTENTS

Page

TITLE PAGE ---------------------------------------------------------------------- i

APPROVAL SHEET -------------------------------------------------------------- ii

PANEL OF ORAL EXAMINERS ------------------------------------------------ iii

ACKNOWLEDGMENT ---------------------------------------------------------- iv

DEDICATION --------------------------------------------------------------------- v

ABSTRACT ----------------------------------------------------------------------- vi

Chapter 1 - THE PROBLEM AND ITS SCOPE

Rationale of the Study ----------------------------------------------------

Statement of the Problem -----------------------------------------------

Significance of the Study -------------------------------------------------

Scope and Delimitations ---------------------------------------------------

Definition of Terms -------------------------------------------------------

Chapter 2 - REVIEW OF RELATED LITERATURE AND STUDIES

Related Literature --------------------------------------------------------

Related Studies -----------------------------------------------------------

Chapter 3 - RESEARCH METHODOLOGY

Research Design -----------------------------------------------------------

Research Environment --------------------------------------------------

Research Respondents --------------------------------------------------

Data Gathering Procedure ----------------------------------------------

 Statistical Treatment ------------------------------------------------------

Chapter 4 - PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

Chapter 5 - SUMMARY, FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

Summary ---------------------------------------------------------------------

Findings ----------------------------------------------------------------------

Conclusion ------------------------------------------------------------------

Recommendations --------------------------------------------------------

BIBLIOGRAPHY -----------------------------------------------------------------

APPENDICES

A. Questionnaire

B. Interview Questions

C. Permission Letters

CURRICULUM VITAE -----------------------------------------------------------

 LIST OF TABLES

Table No. Page No.

1
 ABSTRACT

Chapter 1

THE PROBLEM AND ITS SCOPE

Rationale of the Study

This research study aims to know the effectiveness of informal money

lending business to the micro-entrepreneurs. Informal lenders are money lenders

who are not licensed to do money lending business. They are called 5-6 money

lenders and are well known about this kind of informal lending business which is

patronized by some micro-entrepreneurs and people who wants to put up a new

business in urban areas. 5-6 is the term used in such reason that they lend

money with 20% interest. Like for example, if you borrow from them worth 5000

pesos, you will be returning it at the amount of 6000 pesos or 20% interest rate

within one month or upon the agreed condition.

Micro-entrepreneurs are the most patronizing party in this form of business

because they are the one who are in needs of financial capital for the daily

financing activities of their business. In order for us to understand and give us the

idea why do they are more preferred to borrow in Bombay than other informal

institution, the selected researcher wish to understand and measure the effect of

this form of business to them and dis advantages.

In order to find ways in understanding the behavior of micro-entrepreneurs

and to identify and recommend solution for the problem encountered between

informal money lenders and micro-entrepreneurs, researchers conduct this

research study to know more about the strengths, weaknesses and threats of the

informal money lending business and in order to formulate reasonable decision

that will lead to the competitive advantages in the informal money lending

business. Researchers try to study and analyze if the informal money lending

business if it is recommendable or not to the micro-entrepreneurs and to the

general public.

Statement of the Problem

1.profile of the respondents

 Source of income

 Source of loan
2. what is the amount that can be borrowed from informal lenders

3. their ability to payback the borrowed money

4. What are the terms and conditions applied to each micro-entrepreneur who

borrowed money from the informal money lenders?

Significance of the Study

The researchers strongly believed that this research study will provides a

vital information and importance to the following:

 To the Business Students. This study will give information to the business

students that will serve as their source of information on the strength and

weaknesses and in developing strategy about money lending business.

 To the Micro-entrepreneurs who are Planning to Borrow Money from

Informal Money Lenders. The result of this study may give awareness to

micro-entrepreneurs who are planning to borrow money from informal

money lenders in relation to the effect of informal money lenders in their

business and how they will react in this situation.

 To the Money Borrowers. The study will help them look into possible

situations that may guide them in deciding whenever they borrow money.

 To the Local Government. Hopefully, this study and its result may lead to

the local government officials in implementing some laws and regulations

that will help the micro-entrepreneurs in supporting their business.

Scope and Delimitations

The researcher focused their study on the side of the Pardo, Cogon ang

Kinasang an. The goal which is to measure the effectiveness of informal money

lending business to them which located near Pardo,Cogon ang Kinasang an. Total

number of population the researcher decided to have a sample size of 80

respondents which are selected randomly from Pardo,Cogon ang Kinasang an. It

is part of the study are profile of the respondents, location of the business which is

in the Pardo, Cogon and kinasang an. The source of financial aspect of their

business and the customers that the respondents have. It is not part of the study

the side of the lenders and their business operation.

Definition of Terms

1. Lender - any institution or individual who loans borrower money.

2. Micro Entrepreneurs - Micro entrepreneurs are the owners of small businesses that

have fewer than five employees and have start up costs of less than 10,000 pesos and also

annual revenue less than 15,000 pesos. There are nearly 21.5 million

3. Informal Money Lenders - They are not licensed to accept from the public such are

coincident illegal because they charge very high interest.

4. Bombay - The Indians who are engage in informal money lending business.

5. 5-6 - The money lending business with 20% interest rate within one month or on the

agreed period of time.

6. Interest - The amount that is being increased on the lend amount of money or the

selling price of the money that is being borrowed on the agreed amount.

7. Money Lending Business – is a form of business where in the owner is engage in

lending money to the borrower.

 Chapter 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents a review of related literature and studies. The contents are

collected from different books, unpublished articles, magazines, journals and articles

from internet websites.

Related Literature

Mari Kondo’s 2003 study, “The Bombay 5-6: Last Resource Informal Financiers

for Philippine Micro-Enterprises,” from which we take the terms “5-6” and

“Bombay 5-6,”tackled the differences in lending approaches of Filipino and

Bombay 5-6 lenders in Sta. Rosa, Laguna, Philippines. Kondo also pointed out

attributes of Bombay 5-6 lending which are identical to the findings in our study.

Details about the accessibility and popularity of 5-6 lenders have been drawn

from Arah Limpao-Osop’s 1998 case study, “Informal (5-6) Money Lenders” in

Mindanao, Philippines. Limpao-Osop observed that the absence of other credit

sources and the stiff rules imposed by banks make informal money lending
popular, sustainable and profitable business. In contrast, more than a few credit

sources are now operating their business in Tacloban city. However, the results of

our study concur with the long-standing observation that the less restrictive

manner of transaction gets to the heart of why informal lending prevails. “The

Effectiveness of Informal Money Lending Business to the Micro-Entrepreneurs”

by Joy Danganan (2012), conducted in Quezon City, Philippines cites reasons of

money borrowing from “5-6” lenders and articulated the terms and conditions

between the lender and the borrower. Her study revealed that borrowing money

from informal 5-6 lenders is advantageous only to the lender. Technically, it

should always be the case. However, our study offers a contrasting viewpoint and

suggests ways that ambulant vendors’ may also negotiate advantages from the

arrangement.

Related Studies
 Chapter 3

RESEARCH METHODOLOGY

The study utilized the qualitative and quantitative research methodology.

Qualitative because this study __________________________ . It was likewise quantitative

because it __________________________________________.

Research Design

Research Environment

The Research Respondents

The Research Instruments

Data Gathering Procedure

Statistical Treatment of Data

Chapter 4

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

 Chapter 5

SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATIONS

This chapter concludes the study with the summary of the research processes

undertaken. The findings from which the conclusion was drawn as well as the

recommendations were propounded.

Summary

Summary of Findings

Conclusion
Recommendations

BIBLIOGRAPHY

Books

Journals

Unpublished Materials

Online Sources
APPENDIX A
 CURRICULUM VITAE

I. PERSONAL DATA

Name :

Address :

Date of Birth :

Mother :

Father :

Brothers :

Sisters :

II. EDUCATIONAL BACKGROUND

Senior High :

Address :

Years Attended :

Junior High :

Address :

Years Attended :

Elementary :

Address :

Years Attended :
III. WORK EXPERIENCE

IV. ORGANIZATIONAL AFFILIATION