ABSTRACT

Studies on informal finance in the Philippines abound. They cover a wide range of topics including types of informal finance, interest rate determination, size and structure, interlinkage of informal finance with other markets, and savings mobilization potential, among others. After the liberalization of the financial markets in the early 1980s, an increasing number of people including policymakers began to appreciate the role of informal finance in the domestic economy. For many crops, informal finance makes a lot of difference since it tries to satisfy the requirements of borrowers, such as synchronizing the repayment schedule of farmers to their cash flow patterns with minimal transaction costs. The presumption that the urban sector is adequately serviced by formal financial institutions could be the reason why little attention has been given to urban informal finance. In one low-income urban community studied by Mario B. Lamberte and Ma Theresa Bunda in 1988, market vendors have formed several paluwagan units.