The Philippine bank loans and the production and market performance of industrial and service sectors: A Granger causality analysis

Date of Publication

2016

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Management of Financial Institutions

Subject Categories

Finance and Financial Management

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Thesis Adviser

Frederick P. Romero

Defense Panel Member

Ma. Fuellen Bautista

Michelle Brendy Tan Ocampo

Abstract/Summary

This paper examined the relationship and the causality that exist between bank loans and the production and market performance of industrial and service sectors. The variables are as follows: real gross domestic product for industrial sector (RGDPI) and real gross domestic product for service sector (RGDPS) as measures of production performance Philippine Stock Exchange industrial index (PSEI) and Philippine Stock Exchange service index (PSES), as measures of market performance and bank loans for industrial sector (BLIS) and bank loans for service sector (BLSS). To determine the results and fulfill our objectives, the variables undergo different statistical methods, namely: vector error correction model, vector auto regression model and Granger causality test. The result of the study shows that only real gross domestic product for service sector (RGDPS) and bank loans for service sector (BLSS) confirms with the hypothesis that they Granger cause each other and that a positive and significant relationship exists between the two variables. While other variables are either insignificant or have negative impact. The researchers recommend that the management of the firms carefully observe their loan levels to avoid accumulating interests and non-performing loans. The researchers also recommend that the banking industry further strengthen its screening process, to efficiently allocate resources and make loans more accessible to sectors who are in need. For the economy and the government, it should closely monitor the level of loans issued and make ways to improve the infrastructure, monetary policy and the taxing system of the country. For future researchers, the researchers recommend to include other sectors and use bank deposits or non-performing loans instead of outstanding loans.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU19490

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

iv, 214, 4 leaves ; 28 cm. + 1 computer disc ; 4 3/4 in.

Keywords

Bank loans-- Philippines

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