A thesis submitted in partial fulfillment of the requirements for the degree of Master of Science

Thesis (M.Sc.) - Asian Institute of Technology, 1988

Determining farmer - borrowers' attitudes as well as opinions about and perceptions of bank credit and describing the lending system of three institutional sources of credit namely, so-called rural banks, the Philippine National Bank and the Land Bank of the Philippines, are the objectives of this study. Based on actual experiences and viewpoints of the farmer - borrowers themselves, the study analyzes the efficiency and effectiveness of the delivery systems operated by these banks in channelling farm credit particularly to s mall farmers. The findings indicate that the majority of the farmer-borrowers were satisfied with the current lending policies and procedures of these banks. Significant differences were found between the farming conditions of the farmer - borrowers and the size of formal credit. Similarly, results of the tests performed showed that the farmer-borrowers' age and educational attainment were not significantly related with the size of formal credit. On the other hand, the import ance of informal sources of credit in providing re a l services to the farming population was once more highlighted in the findings of the study. However, a significant number of farmer - borrowers did not consider informal loan mu c h better than the loan obtained from formal sources. Furthermore, the perception of the need for consumption credit was pronounced with farmers with s mall landholdings, which also holds true for those who obtained loans from informal sources. Recommendations stress the necessity of making the credit system more responsive to the real credit needs of the farmer s and include a re - assessment of the current loan policies, specially pertaining to the amount of loan. It is, furthermore, recommended that in- depth studies be made of the various schemes undertaken by those institutions which seek to simplify lending procedures.