Micro, small and medium enterprises (MSMEs) in the Philippines received a shrinking share of bank loans in the second quarter, as both financial institutions and business owners retreated from credit markets.
The slowdown underscores persistent friction in the country’s credit transmission mechanism, where risk aversion among lenders meets cautious demand from smaller firms.
According to reports from Inquirer, the mutual withdrawal stems from the economic fallout of ongoing macroeconomic pressures.
Banks have tightened lending standards, while MSMEs have reduced borrowing due to uncertainty about future cash flows.
This dynamic has left a significant segment of the economy under-financed, despite the sector’s critical role in employment and GDP growth.
The situation mirrors broader regional trends where MSMEs face structural barriers to credit.