Chapter 1

THE PROBLEM ANSD ITS SETTING

Introduction

  Nowadays, in the city of Ligao, most of the small businesses we can

see in our community are sari-sari stores. They are retailing products with

small profits. Sari-sari store is the term used in the Philippines for small

convenience stores. It is from the Tagalog word "sari-sari," which means

"variety." Such stores form essential economic and social locations in the

Filipino community. It is present in almost all neighborhoods, sometimes in

every street. The store is often attached to or part of the owner's house, but

it may also be a freestanding store just in front of the owner's house. Many

stores have advertising material alongside the store name on the

signboards1.

In this crisis, sari-sari store owners borrow money from microfinance

companies—the loan to have a capital in their business and pay it back with

interest. Microfinance is an emerging phenomenon that opens access to

capital for individuals previously shot out from financial services. In its direct

engagement with the poor, microfinance represents a new way for financial

capital to potentially stimulate economic growth and developing countries.

However, microfinance is poorly understood, and it remains unclear whether

it delivers on its promises2.

 Since the early microcredit programs up to the present, microfinance

has grown exponentially, as it has the academic interest on it as a research

subject. Considering that this sector has an impact in terms of sustainability,

any research in the field requires an analysis with comprehensive criteria,

which should include the economic, environmental, social, and governance

dimensions (EESG) and their interrelationships. The objectives of this survey

are to investigate the contributions of microfinance sectoral scholarly

research to sustainability through a systematic literature review using

content analysis method, contextualizing the scientific production and

studying its terminology according to the EESG criteria and under the Global

Reporting Initiative framework, and finally, to identify research gaps and to

propose future research paths3.

Authorities are considering creating a dedicated loan program for

microfinance non-government organizations to boost lending to small

businesses. In reply to the Philippine News Agency (PNA) questions, the

Bangko Sentral ng Pilipinas (BSP) said another option they and the Philippine

Guarantee Corp. are looking into is subsidizing the surety fees of all loans

endorsed through the Credit Surety Fund. "These measures aim to broaden

support for the microfinance and MSME (micro, small, and medium

enterprises) sectors, which are severely affected by the Covid-19 pandemic,"

it said in an e-mail. Authorities recognize the importance of helping small

businesses, especially during the pandemic, as they account for about 99

percent of businesses in the country. Amid this volume, some small business

owners still find it difficult to get a boost from financial institutions due partly

to such requirements as identification cards of owners and lack of assets

that could be used as collateral. The sector is also considered a risky

segment to lend to because of the lack of information about its credit score4.

Setting of the Study

Nowadays, the reality is that many unemployed or low-income

individuals or groups who otherwise would have no other access to financial

services. That is why they are encouraged to take on reasonable small

business loans safely and in a manner that is consistent with ethical lending

practices.

Guilid has a total land area of 204.51 hectares (ha). 53.24 ha is

residential land, 16.6 ha is commercial land, 1.16 ha is industrial land and

29.2 ha is agricultural land. It is bounded on the East by Barangay

Bagumbayan; on the West by Barangay Binatagan; on the North by the

Municipality of Oas; and on the South by Barangay Sta. Cruz.

According to the 2012 Community-Based Monitoring System (CBMS)

Survey, the total number of households is 662 with a population of 3,139

where 1,557 are male and 1,582 are female. It has an average household

size of 5.5
  The research was conducted in one of the barangays in Ligao.

Source: Barangay Hall of Guilid Ligao City

Figure 1
 MAP OF THE STUDY
 Statement of the Problem

The primary purpose of the study is to know the effectiveness of

microfinance to the selected sari-sari stores in Guild, Ligao city. The

researchers aim to find an answer to the following sub-questions:

1. What are the demographic and business profile of the respondents in

terms of;

(a.) Age;

(b.) Sex;

(c.) Civil status;

(d.) Money loans;

(e.) Microfinance companies;

(f.) Interest;

(g.) Monthly sales?

2. What are the problems encountered by the sari-sari store owners in

Guilid, Ligao City regarding microfinance services?

3. What are the possible solutions to improve the business of sari-sari store

owners in Guilid, Ligao City?

4. What are the possible intervention and suggestions can be given to

improve their business?

Assumption of the Study

This study rested on the following assumptions;

1. That the demographic profile the respondents vary in terms of age, sex,

civil status, money loans, microfinance, microfinance companies, interest

and monthly sales .

2. That there are problems encountered by the sari-sari store owners in

Guilid, Ligao City regarding microfinance services.

3. That there are possible solutions to improve the business of sari-sari store

owners in Guilid, Ligao City.

4. That there are possible intervention and suggestions can be given to

improve their business

Significance of the Study

The main significance of the study is to provide crucial information and

knowledge regarding the chosen topic from the respondents, recent studies

or thesis, and related sites needed for the expected importance to the

individual as follows. 

  Sari-sari store owners - this study will guide the sari-sari store

owner to improve their knowledge and make the right decision and spend

the money from microfinance.

Other small businesses - this study will also help them make

decisions when they loan money in microfinance services.

  Local government unit (LGU- Ligao City) - this study will make

them fully informed and help them in policymaking on the financing of small
and medium enterprises through microfinance and other financial

institutions.

Researchers - This paper will serve as a reference for future

academics pursuing similar topics. 

Future Researchers - This study will guide the researchers in terms

of the literature, findings, and conclusions.

Scope and delimitation of the Study

This research is limited to its investigation into assessing the

effectiveness of microfinance to the selected sari-sari store in Guild, Ligao

City. 

The target respondents of the study are the 30 sari-sari store owners.

The focus of the study was centered on determining the demographic profile

of the respondents, age, sex, civil status, monthly capital sale, average

monthly expenses, and income. Knowing the allocation of their money loans,

the problems encountered by the respondents' services in terms of the sari-

sari store and microfinance services, and the possible program intervention

and suggestions can be given to improve sari-sari store owners borrowing in

microfinance companies. 

  The study as a research method will utilize a descriptive kind of

research, and total enumeration of all the respondents will also be used in

assessing its population of respondents. Whatever data findings the study

may have will also be limited only to the present-day situation about the

topic in the surveyed are areas.

Notes

1
https://studymoose.com/why-sari-sari-stores-only-exists-in-the-philippines-
essay
2
https://www.jstor.org/stable/29764974

3
https://www.researchgate.net/publication/

309428621_Microfinance_literature_A_sustainability_level_perspective_surv

ey

4
https://www.researchgate.net/publication/

309428621_Microfinance_literature_A_sustainability_level_perspective_surv

ey

5
https://ligaocity.albay.gov.ph/barangays/barangay-guilid-ligao-city/
 Chapter II

REVIEW OF RELATED LITERATURE AND STUDIES

Rationale

This study was conducted by the research as we can see today in our

community, most of the businesses of every household are sari-sari stores.

They borrowed money from microfinance companies to have capital in their

businesses. 

The study aims to introduce the sari-sari store owners availing the

microfinance services. First, their demographic profile and business status

may vary in age; sex; civil status; money loans; microfinance companies,

interest, and monthly sales. Second, the respondents encountered problems

in microfinance services in terms of; a.) money allocation b.) sari-sari store

owners. Lastly, there is a possible solution to improve their business in

terms of; a.) money allocation b.) Sari-sari store.

Aside from that, this research could give knowledge, advancement,

and information to the researcher's future researcher government sari-sari

stores and other businesses. It can have an outcome like improving their

money allocation and managing their businesses. And also, this study will

serve as a guide for the sari-sari store owners on how to responsibly

manage the borrowed money by using it to improve their business.   Hence

other small businesses will also benefit from this study by making them fully

informed and helping them in policymaking when it comes to financing small

and medium enterprises through microfinancing and other financial services.

And this study will serve as a guide for us as researchers in future academic

and pursuing similar topics. And also, for the future researchers, this study

will serve as their guide in terms of the literature findings and conclusions.

Research Design

This research work was utilized a descriptive-qualitative-quantitative

method of research as it is complementary to the nature of the research

variables.

Descriptive method. This is to develop, test, and evaluate the research

instruments and method. It explores phenomena in a real-life situation and

uses a survey method. Common data gathering methods used are

questionnaires, interviews, and observation.

Survey Questionnaire

Dear respondents,

The third-year Ab-Economics students are currently conducting

economic research as partial fulfillment of other requirements of the

economic research one entitled; " An assessment of the effectiveness of

microfinance to the sari-sari store owners in Guilid, Ligao City” We would like

to know your response to the following questions.

In connection with this, we Trovic C. Almaida, Clarizza P. Macalinao

and Kobe R. Mendoza, would like to request you to be one of the

respondents to the needed data of the research. Rest assured that the

personal information you have provided will be treated with the utmost

confidentiality and used for academic purposes only. Thank you

Direction: Kindly check your answers on the check box provided and if your

answer is not available, please write it in the blank provided.

Business status and Demographic Profile

Name (Optional):

a. Age:

b. Sex:

 Male

 Female
 c. Civil Status

 Single  Married

 Separated  Widowed

d. Monthly Loans

 Below 4,999

 5,000 – 9,999

 10,000 – 14,999

 15,000 – 19,999

 Above 20,000

e. Microfinance Companies

 One Puhunan  North Point

 Card Inc.  Rc Magayon Lending Corp.

 Cash Zone Lending Corp.  Lucky Five Savers Credit Corp.

 Fund line  Philippines National Bank

 ASA Philippine Foundation  Card Bank

Others please specify: ______________________________________

Interest

 Below 100

 200-299

 300-399

 400-499

 500-599

g. Monthly Sales

 Below 999

 1,000 – 1,999

 2,000 – 2,999

 3,000 – 3,999

 4,000 – 4,999

 Above 5,000

2. What are the common problems do you encountered in

microfinance services?

________________________________________________
3. What are the possible solutions do you suggest to improve your

business?

_________________________________________________

4. What are the possible intervention and suggestions you can be

given to improve the business?

______________________________________________________

______________________________________________________

______________________________________________________

______________________________________________________

____________________________________________