UNIVERSITY OF SAN CARLOS

SCHOOL OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTANCY

CREDIT GUARANTEE SCHEME IN METRO CEBU

An Undergraduate Research Proposal
Presented to the
Faculty of the Department of Accountancy
School of Business and Economics
University of San Carlos
Cebu City, Philippines
In Partial Fulfillment
of the Requirements for the Degree
Bachelor of Science in Accounting Technology

Ares, Louise Virginia B.

Caada, Cherylene H.
Solmayor, Von Aldreck E.
Surigao, Mark Bonie J.
October 2016
APPROVAL SHEET

The undergraduate thesis entitled CREDIT UARANTEE SCHEME IN METRO CEBU

prepared and submitted by LOUISE VIRGINIA B. ARES, CAADA H. CERYLENE, VON
ALDRECK E. SOLMAYOR, and MARK BONIE J. SURIGAO in partial fulfillment of the
requirement for the degree in BACHELOR OF SCIENCE IN ACCOUNTANCING
TECHNOLOGY has been examined and is recommended for acceptance and approval for
ORAL EXAMINATION.

Undergraduate Thesis Committee

ChallonerAllegoMatero, DPA, CPA, CIA

Adviser

Eleanor D. Paclijan,CPA,MSA
Member

Dr. Marites A. Khanser

Member

Mr. Richie Tejana, CPA

Member

ACKNOWLEDGMENT

The researchers are more than grateful for those who, in one way or another, contributed
to the completion of this proposal. First and foremost, to God, our Almighty Father for having
graced us with enlightenment and strength.
To our professor, Dr. Challoner Matero, who spent his time laying down a good
foundation enabling us to come up with this actual study. He has equipped us with the proper
knowledge necessary for this undertaking.
To the panel members, Mrs. Eleanor Paclijan, Dr. Marites Khanser, and Mr. Richie
Tejana, for their insight, support and professional comments of the actual study conducted.
To their classmates who willingly helped them in clearing out the ambiguities
encountered during the development of this proposal. It was endearing how they never showed
any hesitation when the researchers were asking for a helping hand.
To their parents, who seemingly is impossible to thank them enough for their undying
support and encouragement.
Lastly, to the University of San Carlos, for allowing us to study within its hallowed halls
thereby giving us the best education that money could offer and a range of experiences
invaluable and unattainable in any other top tier university.

May the Holy Triune God bless you all!

TABLE OF CONTENTS
3

Cover Page ....i

Approval Sheet ........ii
Acknowledgement ..........iii
Table of Contents.................iv
Lists of Tables ..........x
List of Figures .....xi

Chapter 1: Introduction........1
Rationale...2
Statement of the Problem .....4
Significance of the Study .....4
Scope and Limitations ..............5
Definition of Terms ......6
Organization of the Study.....7

Chapter 2: Theoretical Background.................8

Review of Related Literature....8
Credit Guarantee Scheme.....................9
Credit Guarantee Scheme Providers ...9
Credit Guarantee Scheme Practices .......12
Eligibility...........12
Risk Sharing.......13
Guarantee Fees...............13
Operation of the Schemes......15

Constraints in Implementing CGS .....17

Current Framework in CGS .......18
Theoretical Framework ..20
Funded Approach ...........20
Unfunded Approach ...............20
Individual Approach ......20
Portfolio Approach .........22
Enterprise-oriented Approach ........23
Institution-oriented Approach ........23
Ex-ante guarantee approach .......24
Ex-post

guarantee

approach

..

..24
Mutual guarantee approach ........25
Each approach has its advantages and limits .....
..26
Conceptual Framework ......24

Chapter 3: Research Methodology..................25

Research Environment........25
Research Respondents .....26
Sampling Method and Sample Selection .......26
Research Instruments..27
Questionnaires....27
Profiles of Credit Guarantee. ...27
Credit Guarantee Practices ....27
Constraints 28
5

Interview 28
Research Procedures.......28
Data collection ... 28
Data Analysis........28

Bibliography..29
Appendices.32
Curriculum Vitae..34

LIST OF TABLES
Table 1 Credit Surety Fund Loans Comparative Summary....17
6

LIST OF FIGURES
Figure 1 Credit Guarantee Scheme, Japan......16
Figure 2 Individual Guarantee Approach ......... 21
7

Figure 3 Portfolio Guarantee Approach .........................22

Figure 4 Institution-oriented Guarantee Approach ....23
Figure 5 Ex-ante guarantee approach. .......24
Figure 6 Ex-post guarantee approach ....25
Figure 7 Mutual guarantee approach......24
Figure 8 Theoretical Framework .......27
Figure 9 Conceptual Framework ...........................................................................................28