Credit Risk Management and Practices of Adopted Communities Of The University Of Bohol

Abstract

Credit risk management is the process that microfinance institutions (MFIs) use to manage the risks of borrowers defaulting on their loans. Credit risk practices are the day-to-day actions and procedures that help the MFIs bring these strategies to life. The study assessed credit risk management and practices among creditors and borrowers in the University of Bohol's adopted communities with the aim of offering an enhancement program. It examined the demographic profiles of borrowers and their level of credit risk management. Moreover, it investigated the correlation between these profiles and their credit risk practices. The study utilized a quantitative approach. It used descriptive-normative survey to collect data through a standardized questionnaire. Stratified random sampling was applied to select borrower participants from three adopted communities. A total of 71 borrowers, representing about 20% of the borrowers were randomly chosen. The study revealed that younger and middle-aged individuals, especially women and small business owners, are the main borrowers in microfinance institutions. Additionally, borrowers widely supported credit risk management and practices, with an overall mean of 3.28 and 3.37, respectively. Lastly, the spearman rank correlation test showed that there is no significant correlation between borrowers’ demographic profiles and their level of credit risk management and practices. The lack of significant correlations between demographic profile and borrowers' level of credit risk management and practices indicates that these practices are well understood by borrowers across different borrower groups.