The Impact and Cost of Philippine Agricultural Credit Risk Guarantee Schemes / L'Impact et Le Cout Des Schemas De Garantie Contre Les Risques De Credit en Agriculture Aux Philippines (original) (raw)

2016

Abstract

The Philippine experience on agricultural credit-risk guarantee mechanisms indicate that while the subsidy cost of these is much lower than targeted lending programs, the benefits in terms of additionality of lending is limited, Moreover, because of the operating features of the schemes the benefits have largely accrued to participating banks and program borrowers most of whom have established record of financial transaction or with proven record of creditworthiness. Although credit guarantee mechanisms con tribute in reducing lenders' subjective risk, their potential for enhancing borrowers'credit worthiness will be limited unless other fundamental sources of risks and costs that stem from various policy-induced distortions and imperfections in other markets are simultaneously addressed. Because of the externality effects of imperfect markets a possible role of public policy is the reduction in information cost brought about by developments in other markets. Examples includ...

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