Home⇛Mindoro Journal of Social Sciences and Development Studies (MJSSDS)⇛vol. 1 no. 2 (2024)

Establishment of gross loan portfolio risk-return questionnaire: reliability and validity structure

Jason G. Ramirez

 

Abstract:

Microfinance institutions (MFIs) play a pivotal role in fostering financial inclusion and combating poverty in the Philippines. However, assessing the risk-return profile of these MFIs is challenging due to the lack of tailored assessment tools. This study introduces the Gross Loan Portfolio Risk-Return Questionnaire (GLP-RRQ), customized for MFIs in Occidental Mindoro, Philippines. Employing a cross-sectional approach, the study involved five active MFIs. The questionnaire exhibited excellent internal consistency (94.8%) and validity. Results revealed robust associations between various risk and return factors. For instance, credit quality demonstrated strong correlations with specific questionnaire items (Factor 1: Credit Quality, GLP-RRQ item 2, loading = .860). Similarly, sustainability showed significant associations (Factor 3: Sustainability, GLP-RRQ item 6, loading = .880). These findings underscore the reliability and applicability of the GLPRRQ in evaluating MFI loan portfolios. By utilizing this tool, stakeholders can make informed decisions to manage risks effectively and enhance financial performance, thereby advancing financial inclusion efforts and poverty alleviation initiatives in the Philippines.



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