Assessing Mandated Credit Programs: Case Study of the Magna Carta in the Philippines
Khor, Niny; Jacildo, Ryan; Tacneng, Ruth | November 2015
Abstract
This paper examines the Magna Carta Law in the Philippines, which mandates banks to allocate 2% of
their total loan portfolios to medium-sized firms and 8% to micro and small firms. The paper highlights
three findings. First, although total lending to micro, small, and medium enterprises (MSMEs) grew slightly,
MSME loan shares declined drastically from 30% in 2002 to 16.4% in 2010. Second, there was a sharp rise
in noncompliance after loan targets increased in 2008. Third, there is increased heterogeneity in optimal
loan portfolio across banks. Most surprisingly, total MSME lending by rural and cooperative banks declined
since 2008. Abolishing Magna Carta target for medium-sized enterprise loans would most likely yield little
adverse effects.
Citation
Khor, Niny; Jacildo, Ryan; Tacneng, Ruth. 2015. Assessing Mandated Credit Programs: Case Study of the Magna Carta in the Philippines. © Asian Development Bank. http://hdl.handle.net/11540/5270. License: C BY 3.0 IGO.ISSN
2313-6537 (Print), 2313-6545 (e-ISSN)
Keywords
Development
Finance
Development Challenges
Development Issues
Development Problems
Microenterprises Finance
Commercial Finance Companies
Project finance
Development plans
Strategic planning
Business Financing
Foreign investment
Investment companies
Business subsidies
Show allCollapse
Citable URI
http://hdl.handle.net/11540/5270Metadata
Show full item recordUsers also downloaded
-
Asian Development Bank Sustainability Report 2015: Investing for an Asia and the Pacific Free of Poverty
Asian Development Bank (Asian Development Bank, 2015-12-18)The Asian Development Bank (ADB) has issued its Sustainability Report every 2 years since 2007. For 2015, the Sustainability Report highlights the sustainability of ADB’s investments and organizational activities during 2013– 2014. A separate detailed Global Reporting Initiative (GRI) index contains the responses of ADB to standard and specific material disclosures in the GRI’s G4 Sustainability ...The Asian Development Bank (ADB) has issued its Sustainability Report every 2 years since 2007. For 2015, the Sustainability Report highlights the sustainability of ADB’s investments and organizational activities during 2013– 2014. A separate detailed ... -
Knowledge and Power: Lessons from ADB Energy Projects
Asian Development Bank (Asian Development Bank, 2015-10-26)“As the largest development finance institution in Asia and the Pacific, the Asian Development Bank (ADB) has provided to its developing member countries (DMCs) over $28 billion in loans and grants for energyrelated projects from 2008 to 2014. Though significant, this amount only represents a relatively small fraction of the DMCs’ huge investment requirements in the energy sector. ADB’s value ...“As the largest development finance institution in Asia and the Pacific, the Asian Development Bank (ADB) has provided to its developing member countries (DMCs) over $28 billion in loans and grants for energyrelated projects from 2008 to 2014. Though ...