WHAT IS YOUR PROSPECT ABOUT HOW THE PHILIPPINE

FINANCIAL SYSTEM WILL EVOLVE IN THE NEXT TEN YEARS?

A.Y: 2021-2022

Submitted by:
ALJON PATRICK MEDINA
BSBA – Major in Financial Management IIB

MA’AM JULIE ANNE LUSTAN

 Professor in Banking and Financial Institutions
Introduction

When the Covid-19 outbreak began to strike the world especially the Philippines, its

repercussions and irreversible economic disturbances were felt throughout the country. The novel

coronavirus disease, COVID-19, has brought significant change to people’s lives and business

activities nationally, regionally, and globally. Many sectors were affected with the economic

recession it caused as many business establishments and organizations were forced to close

because of the community guidelines and quarantine protocols that needs to be followed by the

citizens and the customers, leaving them no choice but to stay at home— in fear of Covid-19.

With the recent study conducted by ADB Institute on February 2021, they were able to say that

Philippines took swift action—including enhanced community quarantine (ECQ)—to contain the

pandemic and launched an emergency subsidy program with massive public spending to support

disrupted households and businesses. The strict lockdown ran from mid-March to the end of May

2020 in the national capital region and high-risk provinces, causing huge economic losses. Six

months after the March lockdown, the Philippine economy has moved to the recovery stage, but

micro, small, and medium-sized enterprises (MSMEs) are continuing to confront a sharp drop in

demand and revenue. Banking system also felt the economic impact.

Business prospects

As we all know, from the year 2020 where the economic decline of the pandemic were

felt throughout the country, it became the very root of the skyrocketed unemployment rate due to

closing of many business and commercial entities. However, despite the adversities and

economic challenges, the financial system of the Philippines is slowly but surely paving its way
towards recovery. As for the report of the recent trends in the Philippine Financial System, the

total assets of the Philippine banking system (PBS) continued to grow although at a slower pace

of 5.4 percent year-on-year to P19.8 trillion as of end-July 2021. Essentially, this asset growth

was mainly funded by deposit generation, capital infusion and bond issuance. In relevance, banks

continued to lend amid the pandemic. Which is advantageous in the part of MSMEs because they

have suffered instability in year 2020 but everything tookva swift in year 2021. In fact, the total

amount of new loans granted by U/KBs for the month of June 2021 stood P728.7 billion. This

manifestation only proves that the Philippine Financial System is becoming more efficient and

healthy, as banks offer more loans could also mean the expansion of economic horizon of small

enterprise and micro-business, which will lead to a rise of employment rate. Nonetheless, in the

current year, there exist an aim to ensure continuous support to banking operations and key

economic sectors including MSMEs through the Banko Sentral ng Pilipinas relief measures. As

BSP keeps policy rates low and maintains accommodative policy stance, it has been observed

that these enable banks to pass on lower and declining interest rates to their clients. This is

critical in the part of BSP in influencing monetary variables such as exchange rates and interest

rates.

So, with the continuous pursuit of the banking system to assist the health of progressing

business entities and firms will most likely lead the economy and the entire nation's financial

system into its utmost potential.

Thus, with the 72.8 % of MSMEs loans, by the near future in ten years time, it could

possibly or drastically increase by at least 5 to 8 percent (%). If the assets of the Philippine

banking system grows up to 5.4 percent amidst pandemic, how much more would it leap if the

pandemic has ended. In ten years time, in estimate, the assets of the Philippine banking system
will surely increase for at least 8 to 10 percent. It will surely evolve into a financial system where

continuous accumulation and creation of asset would become natural and would even keep on

increasing. A good asset holdings of the financial system, means that it has a good cash inflow.

This could provide economic opportunities to borrowers.

INTRODUCTION

Background of the Study

Since the beginning of the COVID-19 outbreak, WHO has collaborated with nations

and regions in the Western Pacific Region on public health measures to slow or stop the virus’s

spread. In conjunction with other measures, safe and effective vaccines are a key tool for

protecting individuals against COVID-19, saving lives, and reducing widespread societal

disturbance. Countries and localities in the Western Pacific Region have already received

regulatory permission and have begun to introduce one or more COVID-19 vaccinations

(World Health Organization).

The World Health Organization and its partners are collaborating with other countries

throughout the world that have adequate immunization facilities by implementing consensus and

a proper resolution. Many vaccine companies, including Moderna, Pfizer, AstraZeneca, J&J, and

Sinovac, have completed their initial production. All of which are ensured to go through a

scrutinized series of laboratory tests to prove their potential effectiveness, and it has been

approved by the World Health Organization that the mentioned vaccine brands are safe and

effective in combating the effects and complications that the Covid-19 may bring to our body.
Furthermore, the World Health Organization promptly created a reliable strategy to ensure that

efforts to offer fair access to vaccines are implemented as soon as possible. The WHO devised a

contingency plan to prioritize healthcare personnel, government entities, and, most importantly,

those most vulnerable to the virus, our seniors.