Financial Linkages in the Philippines: Constraints and Success Factors

Topic :

The poverty incidence and income inequality in the Philippines rates among the highest in Asia. Microenterprises are the dominant source of employment and income for the majority of the population, but in the past an oppressive financial policy hindered the flow of small loans from formal banking institutions to microenterprises.

This article examines the People’s Credit and Finance Corporation (PCFC) and its linkages with downstream financial intermediaries as a successful strategy for improving the flow of financial services in rural Philippines. This article is based on an in-depth case study (Quiñones, forthcoming), and is part of a global review on financial linkages conducted by the Food and Agriculture Organization (FAO) of the UN thanks to funding from the Ford Foundation. The PCFC case was selected for this region because of its crucial role in mainstreaming microfinance in the country.

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