Effects of Loan-Sharking on Philippines' Microenterprises

This study investigated the effects of loan-sharking on microenterprises in the Province of Capiz, focusing on the sustainability of the business, profitability of the business, and standard of living when taken as a whole and grouped into entrepreneur and business. It was administered to 850 respondents on a quota sampling method where all microenterprises have existing businesses and have knowledge of loan-sharking. Since microenterprises continue to grow, loan sharks attract these business owners. Loan-sharking has been able to coexist with formal loaning systems, and microenterprises kept dealing business with them for it provides easy access to capital, easy payment method, and hope in a time of emergencies. Using statistical tools, findings show that respondents using their demographics are favorable with the effects of loan-sharking on the sustainability of the business and standard of living. On the other hand, the profitability of the business shows a contradiction. Though microenterprises want to get out of loan sharks due to very high-interest imposition and adverse effects; financial literacy, savings mobilization, behavior towards business development, and access to proper capital borrowing schemes geared toward higher business performance, long-term sustainability, and profitability are essential.