Sunday, July 1, 2012

Shocking Facts! Filipino Household Saving & Investing

The Bangko Sentral ng Pilipinas (BSP) has released their first Consumer Finance Survey (CFS) in the Philippines. The CFS generates data on the financial conditions of households, including what they own (financial and non-financial assets) as well as from whom and how much they borrow (sources of credit and level of indebtedness). It also generates data on the income, spending and insurance coverage of households. The survey results also provide a breakdown of respondents residing in the National Capital Region (NCR) and in Areas Outside the National Capital Region (AONCR).

The results of the survey are shocking...

Only 2 out of 10 Filipino households have a bank deposit account
Php 6,875 Median balance of peso deposit account
0.375% Average interest rate on regular savings deposit accounts VS. 19% on Stock Funds (5-year return of a mutual fund tracking the Philippine Stock Exchange)
Less than 1% Percentage of households in Metro Manila that own stocks, bonds, mutual funds or government securities
Php 200 Average emergency savings
43.8% spent more than their income
51.5% spent as much as their income
4.6% spent less than their income
7 in 10 own their home, which includes living with parents
1 in 6 own real property other than their home
1 in 5 households receives financial assistance abroad
4 out of 10 says they will put any surplus money in the bank

Some policy implications that can be drawn from the results of the survey are: first, the BSP should continue to work toward a more inclusive financial system that reaches to those who are otherwise "excluded" or "unbanked".

Second, there is a need to continue to educate Filipino households on the advantages of saving in financial institutions and investing in various forms of financial instruments.

Third, there is a need to look into "shadow banking" transactions and related regulatory and supervisory approaches to monitor system-wide risk exposure to particular sectors without reducing credit opportunities for consumers.

Finally, the BSP should liaise with government pension systems to encourage membership, and regular/timely payment of premiums to national pension and retirement funds among household members who are self-employed and unemployed.

This is reposted from Learning Curve.

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