INFORMAL MONEY LENDING BUSINESS
Darwin Philip Chopen Alera


ABSTRACT

Informal money lending is an illegal lending practice. Though illegal, it serves as an alternative and a prime means of easy loan or borrowing. It is found to be common or rampant in all parts of the country, whether urban or rural.The study presents the status of informal money lending business in the central business district of Bontoc, Mountain Province. This descriptive research determined the extent of consideration the borrower have in relation to the factors involved in availing credit from the informal lenders and its impact in relation to economy. The study uncovered that informal money lenders in Bontoc are matured individuals with stable sources of income, knowledgeable and mastered the ropes of the business. It is a lucrative business of 6%-9% monthly interest earnings. The most probable causes of informal borrowing are: insufficient income of the borrowers, basic needs of the family especially the education of children and borrowers’ long waiting time for salary. There is a positive impact of informal money lending to the economy of Bontoc in terms of daily subsistence, education of children, house improvement, asset purchases, overseas employment, and capital for other business venture. With the positive result of informal money lending in the economy, local officials must look into possibilities of transforming, adopting and formalizing the system into micro-financing projects or credit cooperatives to all kinds of borrowers regardless of purpose. Values formation on the part of the lenders and borrowers should be developed.