With the issuance of Executive Order 113 in 1996, a number of agricultural credit programs were consolidated into the Comprehensive Agricultural Loan Fund (CALF) which has been primarily constituted as a credit guarantee fund in order to encourage banks to lend to the agriculture sector with the assurance that upon loan default by their borrowers, the CALF shall reimburse to the bank up to 85 percent of the outstanding loan.
However, studies conducted by ACPC seem to have cast doubt on the incentive impact of the CALF guarantee to banks to lend to small borrowers. Hence, this study will evaluate the impact of the CALF guarantee on the intended beneficiaries-the small borrowers, who are expected to have increased access to formal credit because of the CALF intervention.
