Philippines found most dishonest in region on money matters

Financial education gaps, economic stress and “face-saving” cultural norms have forced Filipinos to misrepresent their finances, making the Philippines the most dishonest country in Southeast Asia when it comes to money, according to a study.

ROSHI, a Singapore-based fintech firm, said in its Financial Honesty Study: Southeast Asia report that the Philippines had the highest financial misreporting rate in the region at 47 percent, which means that about half are not likely to give an accurate picture of their financial situation.

Indonesia came second at 45 percent, then Singapore at 41 percent.

Vietnam was the most honest, with a dishonesty rate of only 34 percent, followed by Thailand at 36 percent.

The problem, ROSHI noted, was that Philippine society tended to place strong emphasis on social reputation despite financial hardship and literacy gaps, making it hard for financially challenged individuals to seek help.

In Philippine culture, ROSHI pointed out that there was “enormous” pressure to keep face despite financial struggles.

“Admitting difficulties brings shame to the entire family and risks exclusion from social support networks that provide vital help,” ROSHI noted in its report based on a survey across different age groups in six Southeast Asian markets.

This makes misrepresentation of finances a “rational way to preserve social standing and maintain access to economic opportunities,” it added.

Economic challenges are also directly connected with financial dishonesty. The Philippines currently has limited economic opportunities, along with a high cost of living.

Vietnam, on the other hand, has a strong anticorruption focus and expanding opportunities. Its culture also emphasizes trust and community accountability, which both sustain “honest financial behavior.”

Overconfidence bias, or believing that one is better at handling finances than they actually are, is also among the factors that can affect financial transparency.

The Philippines had a high level of overconfidence at 60 percent, while that of Vietnam, which was the most financially honest country in the region, was at around 40 percent.

Risky investments

According to ROSHI, overconfidence can lead to risky investments, low savings and poor spending habits.

At the same time, the Philippines had the highest “present bias” at 68 percent, entailing that people would rather spend money now than save for retirement.

“This reflects the reality that when people struggle to meet daily needs, planning for the future becomes nearly impossible,” ROSHI said.

In terms of age groups, young adults (21 to 34 years old) were the most dishonest in their finances, while older adults (50 to 65 years old) were the most honest. This is a pattern that is present across all countries in Southeast Asia.

It still all boils down to social pressures, ROSHI found.

For example, social media trends often tie financial image to personal identity.

“As a result, many young adults make financial decisions in environments that reward displays of material success, making it costly to acknowledge financial constraints openly,” ROSHI said.

In all, there is a need to intertwine financial education and policy with cultural values and economic realities.

“Markets that achieve natural alignment between cultural values and economic incentives around financial transparency create lasting advantages, while those facing cultural-economic conflicts require recognition and adaptation strategies that acknowledge underlying behavioral patterns,” ROSHI noted.

Source: Inquirer

Banks see higher loan demand in Q1

Banks expect higher loan demand from companies and households this quarter after a series of interest rate cuts done by the Bangko Sentral ng Pilipinas (BSP) last year. 

Based on the results of the BSP’s fourth quarter 2024 Senior Bank Loan Officers’ Survey (SLOS), most respondent banks projected a net increase in overall demand for loans from businesses in the first quarter.

The increase was due to higher customer inventory financing needs, clients’ more optimistic economic expectations and an increase in borrowers’ short-term financing needs.

Likewise, there was also a net increase in overall credit demand from consumers as anticipated by surveyed banks in the current quarter amid rising consumption and banks’ more favorable credit terms.

The SLOS consists of questions on loan officers’ perceptions relating to the overall credit standards of their respective banks, as well as to factors affecting the supply of and demand for loans to both enterprises and households.  

For the fourth quarter alone, the survey indicated a net rise in overall loan demand from firms, but slightly lower than the previous quarter. The increase was also driven by inventory financing needs, optimistic economic outlook and rise in borrowers’ short-term financing needs.

Meanwhile, the diffusion index approach indicated a lower net rise in demand for household loans in the fourth quarter last year compared to the previous quarter.

“The overall increase in household loan demand was mainly due to banks’ more attractive financing terms and higher consumption,” the BSP said.  

This is despite the tighter lending standards for enterprises from October to December and unchanged standards for consumer loans.

“The diffusion index approach indicated a net tightening of credit standards in the fourth quarter of 2024, due to the deterioration in borrowers’ profiles and the profitability of the bank’s portfolio,” the BSP said. 

On the other hand, the broadly steady loan standards for households were mainly due to the unchanged profile of borrowers, tolerance for risk and the profitability of the bank’s portfolio.

Source: Philstar

Percentage of Filipinos with savings dips to over 3-year low

The proportion of Filipino households with savings dipped to its lowest level in over three years in the fourth quarter, with pessimistic consumers yet to regain their pre-pandemic confidence level as they continue to brace for higher inflation and borrowing costs.

A nationwide survey of 5,350 families showed 25.6 percent of families in the Philippines have money to save in the October-December period, lower than the 29-percent recorded in the third quarter, the Bangko Sentral ng Pilipinas (BSP) reported.

The top reasons for setting aside cash were emergencies; health and medical expenses; education; retirement; business capital and investment; and house purchase. But data showed the latest result was the lowest reading since the third quarter of 2021, when the percentage of families that can save stood at 25.2 percent amid harsh pandemic lockdowns.

As it is, some analysts believe that the need to rebuild household savings could delay the benefits of the ongoing easing cycle of the BSP, which has so far cut the policy rate by a total of 75 basis points to 5.75 percent. This is because families might defer any big-ticket purchases until they can fix their inflation-battered balance sheets.

The central bank said households expect inflation to increase, which can hurt their ability to save money. Specifically, consumers expect price growth to average 6.2 percent for the next 12 months, running above the 2 to 4 percent target range of the BSP.

Survey results also showed consumers anticipate interest rates to spike and the peso to weaken against the US dollar in the fourth quarter. Respondents were also worried that joblessness may worsen.

This, in turn, brought the overall confidence index (CI) for households at -11.1 percent in the fourth quarter, staying in the negative territory as pessimists continued to outnumber the optimists during the period.

But while the latest CI for consumers was less pessimistic than the -15.6 percent in the third quarter, the BSP noted that the confidence level of households has yet to return to the positive territory seen before the pandemic.

That was a stark contrast to the overall CI for businesses, which climbed to 44.5 percent from 32.9 percent in the preceding quarter as firms gear up for the typical surge in demand during the Christmas shopping season.

For now, respondents attributed their less downbeat sentiment on expectations of higher and additional sources of income; more working family members; and an increase in available jobs and permanent employment.

Source: Inquirer and BSP