5. Findings
5.2. Non-Defaulters’ Perspectives
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Table 9: Defaulters’ Needs
Description Percentage Freq.
Stop collecting interest 2.02% 2
Reduce interest 31.31% 31
Extend the lending time 56.57% 56
Don’t take properties 2.02% 2
Other 8.08% 8
Total 100.00% 99
5.2. Non-Defaulters’ Perspectives
Table 10 shows the main reasons in helping clients to pay back their loans on time.
Surprisingly, just under a quarter of respondents say that remittance from abroad (mostly from Thailand) is the most important factor among all in supporting their repayment. This is because most of the young people in the area prefer to go to work in Thailand instead of working in the agriculture field in the village. The reason why many young people like to go to Thailand is because Thailand is the only country in the world that Laotian do not have to study the language since most Laotian understand the language more than 90%
(except for writing). As working abroad is one of the ways in helping them to improve their financial status, they regularly send money to support their families back home, some of them leave their kids with their parents; therefore, they keep sending money home to support their kids, some may want to build a new house in the village because they plan to come back to their hometown when they accumulate some wealth.
Referring to Swiss Agency for Development and Cooperation SDC & Embassy of Switzerland (2016), the average remittance amount was 39,980 THB per year, the estimated amount of documented Laotian migrant workers in Thailand in total is approximately 331,098, 368 USD. Just under 22% report that they are able to make their repayment on time because the borrowed funds are used for income generating activities like purchasing goods and services for rice production, growing livestock and other necessary things. The results further indicate that just over 18% of respondents say that their business generates income so that they are able to make the payment to the village bank on time. However, it is seeming that this portion is quite small, this is probably
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because of the SMEs capacity in Laos especially in this area still poorly perform, since SME in Laos in overall is lower than average in comparison with ASEAN nations in many dimensions for example access to market, entrepreneurial and education skills, productivity, technology and innovation (SME Policy Index ASEAN, 2018).
Table 10: Main Factors of Non-Default
Description Percentage Freq.
Invest on income generating activities 22.29% 35 Financial disciplined/ financial plan 7.01% 11
Have regular income/stable job 12.74% 20
Business generates profit 18.47% 29
Income from agriculture 13.38% 21
Remittance from abroad 24.84% 39
Other 1.27% 2
Total 100.00% 157
It is clear from Table 11 that roughly 40% of respondents mention that the village bank has already done a good job so far. This is probably because many of them do not have loans from a bank or financial institution before the entrance of village bank; hence, they do not have any experience to make a comparison, their answers to this question may base on their own experiences on borrowing money from friends, family or moneylenders and they mostly feel more than happy to have a financial service deliver to their village. However, about 30% ask for lower the interest rate, this is probably because the existing interest rate is still high starting from 1.5 to 2.5%, they may make the comparison with the private or state bank which provide a lower interest rate for instance Agricultural Promotion Bank (APB) offer 11.0% per year (Agriculture Promotion Bank, 2020).Just over 21% say that in order to ensure that they can keep paying back the loans on scheduled time or at the end of the contracts, the village bank should consider to extend the loan period, the reasons may include the uncertainty for agriculture production, clients may have to rely on another sources of income, some businesses like small construction businesses, clients take loans from village bank to do the housing for others, but they need to pay for the materials first, it may take longer time till they receive payment from house owners, or if they grow castle even takes longer.
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Table 11: Non-Defaulters’ Needs
Description Percentage Freq.
Reduce interest rate 30.71% 43
Increase loan ceiling 5.00% 7
Extend loan period 21.43% 30
Work faster 1.43% 2
Inform members one or two days in
advance for VB service 0.71% 1
Do a great good job already 39.29% 55
Other 1.43% 2
Total 100.00% 140
Table 12 presents how borrowers would feel if they become defaulters. The results show that 61 out of 139 respondents or about 44% say that they would feel not happy/worried if they would have their loan default, the reason why the say this, it is probably because many of them have very limited experiences of being the clients of financial institution or bank and some of them were unbanked before, they would feel uncomfortable or not happy if they would face this kind of issue and most people always dream of the live without any debt. In total, about one fifth state that they would afraid of losing their properties, since in most cases, they put their land with house, agriculture land, cattle, etc. as the collateral, they may afraid that the village bank would take their properties immediately if they would not pay their loan on time and they cash flow mostly rely on those properties. Also, the findings reveal a similar finding as Table 7 that very few respondents don’t care if their loan proposals would be rejected by the village banks in the future.
Table 12: Feeling on Loan Default
Description Percentage Freq.
Feel nothing 9.35% 13
Afraid of over debt 4.32% 6
Afraid of losing properties 20.86% 29
Afraid of losing honesty 5.76% 8
Afraid of losing face 4.32% 6
Afraid of unable to get loan from
VB in the future 2.88% 4
Afraid VB losing benefit 0.72% 1
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Not happy/ worried 43.88% 61
Don't know 5.76% 8
Other 2.16% 3
Total 100.00% 139
Table 13 illustrates the actions the respondents would take if they were defaulters in the future. Just over 37% responders mention that selling their properties would be the first option they consider for instance livestock, this is because the average of the livestock ($1,613) is about 2 times higher than the average of the loan amount ($821) the clients have (Table 27 &
Table 30). Result shown that up to almost 30% say that they would come to the village bank to consult with the village bank committees (mostly to extent their lending time) how to deal with their overdue since the negotiation seems to be easily if they compare with the moneylenders and the commercial bank and they may have heard from others clients before that the loan can be restructured quite easy since the village bank do not really strict on the regulations. Except for the village bank, family, relatives, friends and moneylenders are financial sources of rural people; therefore, almost 25% of them consider those sources when they want to have money to cover the loan borrowed from the village bank.
Table 13: Non-Defaulters’ Choices in Problem Solving if They Would Default
Description Percentage Freq.
Borrow money from family, friends,
relative or moneylenders 24.79% 30
Sell properties 37.19% 45
Consult with VB about how to solve
problems 29.75% 36
Find extra income 5.79% 7
Other 2.48% 3
Total 100.00% 121