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Background of The Study

This document provides background information on a study about the factors affecting the financial performance of credit cooperatives in Butuan City, Philippines during the COVID-19 pandemic. The study will examine how the pandemic has impacted the return on assets (a measure of profitability) of cooperatives in Butuan City. Cooperatives are vulnerable to economic distortions from the pandemic like decreased demand and supply chain issues. The researchers aim to understand the extent of COVID-19's financial impact on cooperatives compared to pre-pandemic performance and provide insights for existing and future cooperatives.

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Nelzen Garay
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55 views

Background of The Study

This document provides background information on a study about the factors affecting the financial performance of credit cooperatives in Butuan City, Philippines during the COVID-19 pandemic. The study will examine how the pandemic has impacted the return on assets (a measure of profitability) of cooperatives in Butuan City. Cooperatives are vulnerable to economic distortions from the pandemic like decreased demand and supply chain issues. The researchers aim to understand the extent of COVID-19's financial impact on cooperatives compared to pre-pandemic performance and provide insights for existing and future cooperatives.

Uploaded by

Nelzen Garay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Leader: Alaan, Eralisa F.

Members: Aldover, Cindy Mae C.


Garay, Nelzen Thrill C.
Lavanza, Gianne Christine L.
Samson, Meryl Jeams E.
Section: BSA A31

Approved Thesis Title: Factors Affecting the Financial Performance of


Credit Cooperatives in Butuan City during COVID-19
Chapter 1

THE PROBLEM AND REVIEW LITERATURE

Background of the Study

COVID-19's forced business shutdowns and supply chain interruptions

are having an impact on cooperative financial institutions' operations.

With a substantial rural presence in many developing countries, these

cooperatives are critical providers of financial services to consumers and

small and medium-sized businesses. Despite the fact that some rural areas

have been spared the effects of the virus's propagation, the pandemic's

economic distortions on demand—and, in some cases, exports—have had a

significant impact on them.

The Credit and Savings Cooperatives Society is a group of people who

have a shared goal or desire to improve their economic and social lives by

joining forces. These credit unions are a part of the greater financial

industry, and they are responsible for delivering a variety of services

such as credit, savings, and insurance. Although the savings and credit

cooperatives are set up to target low- and middle-income individuals, their

development goal is to promote financial access and alleviate poverty for

their members. Despite the fact that the majority of rural people are

financially disadvantaged, the situation is not bleak, and the cooperative

movement has been considered as one of the financial mechanisms that can be

used to increase low-income workers' financial access. Among low-income

individuals, financial cooperatives are seen as a way to instill a saving

culture. The United Nations (UN) has endorsed cooperatives as a tool to


overcome the limitations of formal financial providers in its 2012

International Year of Cooperatives report as a tool to overcome the

limitations of formal financial providers (Périlleux, 2013). The creation

of financial cooperatives, according to Rabobank (2012), is a strategy for

resolving market failures and dealing with the problems that arise from

borrowers receiving asymmetric information.

Lack of financial services is a major hindrance to the country's

capacity to compete. In many developing countries, it is logical to expect

that broadening the breadth of financial services available would be a

major development policy priority. According to current knowledge, this

expansion should be aided by fostering the formation and consolidation of

effective local institutions capable of providing financial services to

target groups rather than by channelling funds from overseas. Cooperatives,

according to Rabobank (2012), are not intended to provide direct assistance

to the poor and marginalized, who lack economic potential and have no

access to pooled resources. Their fundamental value is not in how

cooperatives can help the impoverished and marginalized, but in how groups

of people may benefit themselves by founding or joining cooperatives, not

in how cooperatives can help them.

The first incidence of the virus was discovered in the Philippines in

January 2020, and the protocols were put in place in March of the same

year, as the number of cases had increased. As a result, Butuan City is one

of the Caraga region's high-risk zones from March to December 2020. The

majority of businesses have slowed down and restricted their activities in

order to prevent the virus from spreading. Because of a variety of


obstacles, they have been unable to meet their needs successfully. The

interest rate they impose on their products is one of the issues they face.

The researchers were driven to investigate the elements that influence

the financial performance of credit cooperatives in Butuan City in light of

the above-mentioned circumstances. Return on assets, often known as

profitability, is a measure of how well a company's financial performance

is affected by a variety of factors.

In light of the situation, cooperatives, particularly those in Butuan

City, have been chosen as the study's respondents since they are the most

vulnerable to the pandemic's effects. As a result, the researchers wanted

to see how big COVID-19's impact is.  When compared to activities before

the crisis, there was a pandemic in the profitability of cooperatives. The

findings of this research will provide a detailed overview of the

cooperative industry in Butuan. While the pandemic continues, this would be

extremely valuable to existing and future players in making informed

judgments.

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