Volume 11, Issue 9 (September 2024), Pages: 134-142

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 Original Research Paper

The credit risk management practices of lending companies in Nueva Ecija: Basis for risk mitigating plan

 Author(s): 

 Jennilyn C. Mina *

 Affiliation(s):

 College of Management and Business Technology, Nueva Ecija University of Science and Technology, Cabanatuan City, Philippines

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 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0002-7835-6045

 Digital Object Identifier (DOI)

 https://doi.org/10.21833/ijaas.2024.09.015

 Abstract

As the Philippine economy works toward greater stability and aims to improve the social and financial well-being of its citizens, the Central Bank of the Philippines must manage and oversee the movement of money across the country. The circulation of money helps to balance inflation and unemployment rates. In the rural areas of Nueva Ecija, Philippines, one can easily observe various establishments where individuals can apply for loans, particularly from lending companies. Over the past years, this type of business has grown, and as institutions that deal primarily with money, they inevitably face significant risks. This study, using a descriptive method, was conducted to examine the different credit risk management practices used by lending institutions in these municipalities, particularly focusing on credit analysis and collection policies. Additionally, the study aimed to assess the loan collection performance of these lending institutions, considering factors such as portfolio-at-risk, on-time repayment rate, and past-due rate. The results showed that the credit risk management practices of these lending companies do not significantly affect their loan collection performance. The study also identified weaknesses in the common practices of these institutions by analyzing the market. These identified shortcomings serve as the basis for the researchers to propose a plan to reduce the impact of unavoidable risks.

 © 2024 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Credit risk management, Loan collection performance, Lending institutions, Portfolio-at-risk, Inflation and unemployment rates

 Article history

 Received 8 April 2024, Received in revised form 6 September 2024, Accepted 7 September 2024

 Acknowledgment

No Acknowledgment.

 Compliance with ethical standards

 Ethical considerations

Informed consent was obtained from all participants, and their data were anonymized to ensure confidentiality. Participation was voluntary, and no sensitive information was disclosed.

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Mina JC (2024). The credit risk management practices of lending companies in Nueva Ecija: Basis for risk mitigating plan. International Journal of Advanced and Applied Sciences, 11(9): 134-142

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