Browsing by Author "Timbang, Michael O."

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    Determinants of access to finance: firm characteristics, institutional environment and informal payments
    (2016-06) Timbang, Michael O.
    Access to finance is crucial to economic development. The important policy question is: What determines firms’ access to finance? This paper seeks to address this question by exploring the impact of firm-level characteristics and institutional environment on firms’ access to external finance, as measured by firms’ reliance on bank credit, non-bank financial credit, and informal credit for external financing of working capital, using the firm-level data set of the 2009 World Bank Enterprise Survey in the Philippines. The results provide unprecedented empirical evidence that the firm’s access to bank and non-bank credit is determined by firm-specific characteristics such as the firm’s size, age, technological characteristics, female ownership, and spending on "informal" activities that the firm has to incur as "additional costs" to facilitate its operations in an environment of weak institutions. Meanwhile, firm-level characteristics are not significant determinants of informal credit given that financial sources of this kind are known to be less sensitive to firm characteristics than formal institutions, which extend credit based on observable firm characteristics to mitigate information asymmetry problems.
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    What is the effect of OFW remittances on the Philippine peso in 2005-2010?
    (2010-10-08) Velasco, Ma. Monina D.R; Timbang, Michael O.
    With the extensive integration of the Philippine labor market to that of the international arena, it is but natural that a continuation, if not a sudden acceleration in the level of OFW remittances is to be absorbed by the Philippine economy. The goal of the study is to prove that the further increase in the remittance receipt, given the ,; continuous emigration, significantly causes the recent trend of peso appreciation. Current trend depicts of the sharp appreciation of several Asian currencies since 2004, especially in the case of the Philippine peso which recorded increasing value vis-a-vis the US dollar only in December 2005 yet, even then, it had the fastest appreciation during the period 2005-2007. Subsequently, country receipt has been averaging over US$1 billion every month since 2005. With such, remittances are presumed to have positive impact on the current account: they increase national income by accumulating foreign exchange and raising national savings and investment as well as by providing hard currency to finance imports resulting to a probable current account surplus. A country in current account surplus must experience a currency appreciation to induce domestic residents to acquire additional foreign assets. With the interaction of these remittances with other aggregates comprising the Balance of Payments (i.e, net exports, foreign direct investment and net portfolio investment), however, results vary. After an OLS-regression was conducted, two conclusions are of importance: (1) OFW remittances, as a part of the current account, are statistically significant in determining the nominal exchange rate; and (2) The current account supersedes the effects of the capital account in determining the equilibrium exchange rate. The empirical groundwork provided, make evident the strong link between a stable and competitive Philippine peso and a sustained influx of OFW remittances. Consistent with the Balance of Payments approach, the sustainability of remittance inflow to the country increases the foreign currency held by the economy driving the demand for peso to rise relative to the US dollar, cutting down the nominal exchange rate thereby leading to the peso appreciation.