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Published byStacy Atherton Modified over 10 years ago
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THE BLACK HOLE AND THE MISSING MIDDLE
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THE PROBLEM IN THE PHILIPPINES Lack of access to finance by mSMEs is listed as one of the top ten constraints by firms Only 33% of firms have access to credit Lenders taking security require 240% of loan value in collateral
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MISMATCH OF ASSETS AND REQUIREMENT Assets Held by Firms Assets Banks Accept as Collateral 44% 34% 23%23% Vehicles/machinery/equipment Accounts Receivable Land / Real Estate 73% 27% Land / Real Estate Movable property
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WHY HEAVY RELIANCE ON REAL ESTATE vs. MOVABLE ASSETS Movable Collateral is deemed risky: –No assurance of priority against other interests –Deficient registration system and unequal treatment of different forms of security interests in the law –Unreliable and slow enforcement against movable collaterals
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THE MOVABLE COLLATERAL REGISTRY Broad scope of movable assets that may be used as collateral; Clear rules on priority of claims; Simple, cost-effective, accurate, and transparent registry Effective enforcement upon default
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TYPES OF MOVABLES Equipment Inventory and raw goods Cash-flows (receivables & secured sales contracts) Intangibles and documents (e.g. securities, warehouse receipts, instruments, contracts, etc.) Crops and livestock Fixtures – movables fixed to real estate Consumer goods Patents and Intellectual Property Rights
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Diversified portfoliosAccess to critical informationAssured lenders prioritiesStrengthened risk managementBetter reporting mechanisms BENEFITS TO LENDERS
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MOVABLE COLLATERAL REGISTRY NOT ONLY ENHANCES ACCESS TO CREDIT BUT MORE IMPORTANTLY, IT PROMOTES FINANCIAL INCLUSION ACROSS ALL SECTORS
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MARAMING SALAMAT
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