Education, Microfinance, and Poverty in Philippines

Benjamin Drean


Abstract: This study investigates education, microfinance, and poverty in Philippines using the vector error correction model (VECM) method. The
test results of macroeconomic variables and bankspecific factors for Non-Performing Loans (NPLs) in Philippines use VECM. Provides results that the NPL
variable provides a positive and significant response to credit increases in the short and long term. This means that high and low credit levels lead to high and low NPL levels. The inflation variable used as a macroeconomic indicator has different effects on the NPL level in the short and long term. In the short term, the inflation variable is detrimental to the NPL level. This means that the increase in the inflation rate does not affect the NPL level. Meanwhile, in the long term, inflation has a positive and significant effect on the NPL level. That is, an increase in the inflation rate increases the NPL level. Inflation that increases this increase is caused by government policies that increase the price of goods which causes prices to rise as well. Then this can affect people's purchasing power so that the business world weakens. Resulting in hampered credit.

Keywords: VECM, Microfinance, Education, Poverty

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