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A STUDY ON THE FACTORS AFFECTING THE

LOAN DECISION:
A Case of Accounting Personnel in Deped –
Division of Oriental Mindoro
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Action Research Proposal
Presented to
Dr. Romell A. Ramos
In Partial Fulfillment in Subject: Business Statistics
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Mary Joy A. Huerto

Clea C. Dasil
A. BACKGROUND OF THE STUDY

The ability to manage personal finances has become increasingly important in today’s
world. People must plan for long-term investments for their retirement as well as their children’s
education. They must also decide on short-term savings and borrowing for vacation, education,
emergency, a house and car loan, and other items. Additionally, they must manage their own
medical and life insurance needs (Chen & Volpe, 1998).
Philippine government employees are enjoying more benefits, bonuses and a salary
increase within the present administration. However, they may still find themselves faced with
unexpected needs. When this happens, they need to seek financial assistance. This is where
personal loan for government employees comes in. Luckily for government employees, the
stability of their work makes them more eligible to apply for loans. There are two options for
government employees in the Philippines looking for a personal loan: government agencies and
banks.
Indebtedness to Government Financial Institutions (GFIs) and Private Lending Institutions
(PLIs) by the non-Teaching Personnel of Deped, Division of Oriental Mindoro is a continuing
concern as this has directly affected their performance. It is not uncommon to see that employees
may need help financially and most companies help out by giving out salary advances or loans to
their employees. Hence, it is important to consider few things if you are inclined to give employees
advances of even a loan.
There are number of situations in which employees may ask their employer for a company
loans. For example, the employee may be purchasing a house, sending a child to college or making
other large purchases, or the employee may be experiencing a personal hardship. Like any other
benefit offered to employees, establish a clear policy that states the details of yhe loan program
and sets the stage for a consistent practice among all employees.
“To be able to survive, education personnel have been victims of loan sharks, even with
their legally mandated allowances. Briones should have first considered the impact of deductions
on teachers’ salaries. Other education personnel are already in a cycle of indebtedness since there
was a little significant increase in their salaries. Queuing loan payments and maintaining the net
take home pay will not solve the problem unless salaries will meet the standard cost of
living.”(Valbuena, 2017)
 Senator Grace Poe is seeking to raise the minimum pay of public school teachers and non-
teaching personnel in the elementary and secondary levels. Poe has filed Senate Bill No. 2310
seeking to increase the minimum pay of public elementary and high school teachers from
₱18,549.00 to ₱25,000.00 a month, and from ₱9,000.00 to ₱15,000.00 a month for non-teaching
personnel. (Inquirer.net, 2014)

“Sadly, due to the low pay, many of our teachers migrate to work not as teachers but as
a domestic helpers, nannies or caregivers.” (Poe, Grace, 2014)

Over the last five years, the salary of non-teaching Personnel has increased several times
through the implementation of new Salary Standardization Laws. However, the progression of
salary grades within the market is exponential. Simply put: the higher the salary grade, the higher
the increase an employee gets from the previous level. This works on the premise that at higher
levels, there is less opportunity for promotion and the labor pool of critical talent is smaller. But
despite of this tremendous increase in salary, yet the same questions remain still significant today.
Did the salary increases actually improve the non-teaching personnel’s quality of life? Are they
now less prone to onerous debts and usurious loan terms?

To address the issue of the agency, a study was conducted to identify the factors affecting
the loan decision of the Accounting Personnel in the Division of Oriental Mindoro. Through
convenience using simple random sampling method, 11 respondents from Accounting Unit of the
Division Office was requested to participate in the survey wherein all members of the population
have a chance of being of being included in the sample.

This study employed the method of research and we as researchers conducted survey
through questionnaire to attain the data needed in the study. The gathered data were analyzed,
presented, and interpreted.

B. OBJECTIVES OF THE STUDY

1.1 General Research Objective

The general research objective of this study is to identify the various factors and reasons
affecting why Accounting Personnel of Deped, Oriental Mindoro end up in loan decision
making.
 1.2 Specific Research Objectives
i. To assess how socio-economic status affect the loan decision of Accounting Personnel in
the Division Office.
ii. To determine the causes of acquiring loan from government and private lending
institutions.
iii. To examine how personnel’s knowledge influences their opinions and decisions on
personal issues in finance.

C. SIGNIFICANCE OF THE STUDY

This study is justified for a number of reasons. I also indicated the financial burden of the
workers in recent times. Poor financial behaviors are “personal and family money management
practices that have consequential impact on one’s life at home and/or work (Garman et.al. 1996).
However, efficient management of loans lead to increase productivity of the lender, improve his
level of income and enhances his social status in society. The study will provide a framework for
the companies who provide loans to their workers in designing the appropriate facility that would
enhance the welfare of the workers. The study will serve as a reference point to other writer who
may research more into loan acquisition by employees, the purposes and its impact on their
lifestyle economically, socially and psychologically.
This study is very significant in view of the fact that the role of accounting personnel is
essential in achieving the mission of the agency and that is to serve as stewards of the institutions
to enable to deliver effective and efficient ways of learnings. This study will help to identify the
determinants and the factors that affect and influence the loan decision of this Personnel.
Specifically, this research seeks to investigate the phenomenon that many non-teaching
Personnel in the Division Office are caught in a “debt trap.” Briones recalled that one of her first
actions when she assumed the position as Education chief was to conduct in-depth studies on the
spending habits of DepEd employees, both teaching and non-teaching personnel. This led to the
birth of various efforts and partnerships of DepEd with other key agencies and organizations that
promote financial literacy. (https://www.deped.gov.ph/2018/11/29/education). Accounting
staff’s indebtedness may be due to the ease in borrowing. Just sign the papers and you’re in. They
can even take a personal loan, which are usually not collateralized and do not entail any group
pressure to pay, as in the case of some microfinance credit programs.
Moreover, some non-teaching may simply lack financial literacy. Many borrow to make ends
 meet, but an increasing number borrow for holiday travel, or to buy personal items (jewelry,
entertainment appliances), or to spend on family parties. Their inadequate financial literacy, plus
the ease of borrowing, engenders over-borrowing. With multiple loans, they could end up having
a net monthly pay of only PHP 5,000. And finally, the moral hazard problem: loan forgiveness
programs introduce a big element of laxity in payment among borrowers.

D. METHODOLOGY

Research Design

Research design is a detailed and logical outline that serves as a guide to the
researcher in the collection, analyses and the interpretation of the data on observed
phenomenon (Nachmias et al 2008). This study used the survey design to collect
information on individual accounting employees, their views on loan acquisition, the
benefits derived from these loans and their impact on the lifestyle of employees who are
loan beneficiaries.

Population and Sample

A total of eleven (11) the Accounting Staff of the Division Office were randomly
taken as a sample.

To gather the data for the purpose of this research, a three-part questionnaire
was used. The first part of the questionnaire was about the demographic factors of the
respondents. The second part includes one (1) question to determine if the respondent
has an existing loan and the third part includes two (2) questions to determine the most
common reasons why the respondent acquire loan and why he/she chose a particular
lending institutions, respectively.

Sampling Technique

The sampling technique or procedure used by the researcher is simple random

sampling. This was used to select number of individuals to be part of the sample size
wherein the researchers selected those individuals or respondents who have experience
 in borrowing money from the accredited private lending and government financial
institutions.

E. OUTPUT/OUTCOMES/DERIVATIVES

This Chapter presents the tabulation, distribution and analyzation of the data that the
researchers’ gathered from the respondents.

I. Respondents’ Profile

Table I

Percentage Distribution as to Respondents’ Sex

SEX TOTAL PERCENTAGE (%)

Female 10 91%
Male 1 9%
TOTAL 11 100%

Table 1 presents the percentage distribution as to respondents’ sex. It can be inferred

from the table that the majority (91%) of the respondents were females and the remaining percent
(9%) were male.
 Table 2

Percentage Distribution as to Respondents’ Age

AGE TOTAL PERCENTAGE (%)

26-30 5 45.40%
31-35 2 18.20%
36-40 2 18.20%
41-45 1 9.10%
46-50 0 0.00%
51-55 0 0.00%
56-60 1 9.10%
TOTAL 11 100%

Table 2 shows the percentage distribution as to respondents’ age. As can be seen in the
table, out of the eleven (11) respondents, most 2 (18.18%) of the respondents were 31-35 years
of age; 2 (18.18%) were 36-40; 2 (9.09%) were 41-45 and 51-60; 1 (9.09%).

Table 3

Percentage Distribution as to Respondents’ Civil Status

STATUS TOTAL PERCENTAGE (%)

Single 4 36.40%
Married 7 63.60%
Widow/er 0 0.00%
Separated 0 0.00%
TOTAL 11 100%

Table 3 shows the percentage distribution as to the respondents’ civil status. As can be
seen in the table, most 7 (63.60%) of the respondents’ civil status were married and 4 (36.40%)
were single.
 Table 4

Percentage Distribution as to Respondents’ with Existing Loan

No. of Respondent with Percentage (%)

With Existing Loan?
Existing Loan
YES 9 81.82%
NO 2 18.18%
TOTAL 11 100%

Table 4 shows the percentage distribution as to respondents’ with existing loan. It can be
interred from the table that most nine (9 or 81.82%) of the respondents answered YES with
existing loan and two (2 or 18.18%) answered NO existing loan.

Figure No. 1

Most Common Reason Why Accounting Personnel Make Loan

0
0 0

4 or 36%
For Education Respondents
Travel & Leisure 7 or 64%
Respondents
Higher Cost of Living
Other Emergency Situations
Investments

This figure 1 shows that 7 or 64% of the respondents make loan for Other Emergency
Situations and 4 or 36% are for Investments.
 Figure No. 2

Reasons for Loan Acquisition of Accounting Personnel

7

6
No. of Respondents

0
Low Interest Rate Less Requirements High Maximum Credit Fast Transactions
Limit
Loan Policy Structure

This figure shows that 6 or 54.55% of the respondents choose to avail loan in a particular
lending institution because of the Low Interest Rate they offer, while 5 or 45.45% choose to avail
loan that provide them Fast Transactions.

Results and Discussion

By investigating the condition of debt among the accounting staff and the factors that
possibly led many of them to be caught in a “debt trap” and usurious lending it will give us a
significant indication of the status of their overall financial well-being. The discussion of the result
will focus on the selected respondents’ current financial condition, and the factors identified that
made them prone to debt.

Figure 1 shows that the respondent’s perception on the level of their loan relies on the
factor that they make use loan for Other Emergency Situations. It is also evident from the data
presented that the mean of the average age of respondents that affect the loan decision is
between from 35-38 years old.
 Being able to fully satisfy one’s daily financial needs without resorting to borrowing is a
good indication of financial health. There are however various reasons that will compromise the
ability of a person to make ends meet such as personal emergencies, calamity and economic
downturn. All of these future events might force a person to resort to borrowing especially if one
does not have savings to act as buffer to escape him out of these conditions.

Conclusion
Primarily, the study intends to provide a clear illustration of the current status of
the financial well-being of the non-teaching personnel particularly the accounting staff in
the Division Office in terms of their financial condition and the factors affecting this
condition. The findings of the research confirmed that debt is still a significant challenge
in the financial well-being of the non-teaching employees in the country. As the Philippine
embark on a lot of reforms in salary standardization law of the government employees,
the role of the nonteaching in the success of the agency is without question. Giving
sustainable priority to the well-being of these employees is a prerequisite in ensuring the
quality service they may serve. No amount of resources and innovative reforms in the
field of education can substitute to having an army of nonteaching who are skilled,
dedicated and motivated and at the same time, who are living a life of financial
contentment and growth.