DESPERATION IN DEBT: EXAMINING THE EFFECTS OF HIGH-INTEREST DEBT ON LOW-INCOME FAMILIES IN MATANAO DAVAO DEL SUR, PHILIPPINES
Abstract
High-interest debt had become a common yet burdensome financial strategy among low-income families in the Philippines, particularly in areas where formal lending is inaccessible. This study explored the socioeconomic factors that led low-income families in Matanao, Davao del Sur, to rely on high-interest debt, its impact on their financial stability and emotional well-being, and the coping mechanisms they used to manage their debt situation. Using a qualitative phenomenological approach, the study gathered data from 15 participants to gain a deeper understanding of their lived experiences. The results revealed five main socioeconomic factors contributing to debt: economic instability and financial challenges, barriers to formal financial systems, reliance on alternative lending and personal networks, investment-driven borrowing amidst limited resources, and limited financial literacy and management skills. The impacts of debt were reflected through three themes: emotional and mental distress, financial instability and debt pressure, and a vicious debt cycle and management. In response, participants adopted coping mechanisms reflected in three themes: financial management and planning, strengthening financial responsibility and resilience, and seeking government support and assistance. The study offered insights that could help policymakers, financial institutions, and social programs develop better financial education, create accessible credit options, and design targeted support systems to break the cycle of high-interest debt among vulnerable households.
JEL: D14, G51, I32, O15, R20
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DOI: http://dx.doi.org/10.46827/ejefr.v9i4.2028
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