If only I could borrow more! Production and consumption credit constraints in the Philippines.

This paper provides a new approach to analyzing credit constraints by differentiating which of the household's production and consumption decisions are affected by credit constraints. It also provides a first attempt to estimate of the extent and determinants of credit constraints in the Philippines. Based on direct questions on households' experiences in credit markets, we estimate the percentage of credit-constrained households at 65%. The lack of credit constrained the level of agricultural production of 37% of the farming households; it also constrained the level of family business production of 31% of the households operating such businesses. Credit constraints also limited consumption choices of 21% of the sample households. We found that the presence of credit programs operating in the village and proximity to commercial banks and rural banks reduced the probability of credit constraints in production decisions. Further, some types of households are more likely to experience credit constraints. These are the households with little education, households that own little or no titled land and sugar-producing households.