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© 2019 Conscientia Beam. All Rights Reserved. 

CORRELATION BETWEEN FINANCIAL DIFFICULTIES AND FINANCING 
STRATEGIES AMONG MARKET STALLHOLDERS IN BATANGAS CITY   

 

 

 Amor A. Ilagan 

 

Department: College of Accountancy, Business, Economics and International 
Hospitality Management Batangas State University, Main Campus I 
Batangas City, Philippines. 

 

 
 

 ABSTRACT 
 
Article History 
Received: 15 January 2019 
Revised: 28 February 2019 
Accepted: 9 April 2019 
Published: 1 July 2019 
 
 

Keywords 
Debt financing 
Financial difficulties 
Financing strategies 
Internal financing 
Market stallholders 
Pecking order theory. 
 

JEL Classification:  
G20, G21. 

 
The aim of this study was to determine the correlation between financial difficulties and 
financing strategies among market stallholders in Batangas City. Specifically, the study 
sought to determine the profile of the respondents in terms of age, sex, civil status, 
highest educational attainment, market section, number of years in operation, average 
monthly business income and stall location. The researcher also assessed the financial 
difficulties experienced by market stallholders and the extent of utilization of financing 
strategies in terms of internal financing and debt financing. Moreover, the researcher 
also determined the correlation between financial difficulties and financing strategies, 
the significant difference on the financial difficulties experienced by market stallholders 
and extent of utilization of financing strategies of the respondents when grouped 
according to profile variables. The findings of the study revealed that there is a 
correlation between financial difficulties and internal financing and another correlation 
between financial difficulties and debt financing utilized by market stallholders. An 
extension activity was proposed as an output of this study so that market stallholders 
would understand the different financing strategies banks and other microfinancing 
institutions are offering.  
 

Contribution/Originality: This study contributes to the existing literature on the financial difficulties of 

market stallholders. The study uses a new estimation methodology as a survey questionnaire in determining the 

correlation between financial difficulties and financing strategies. This study is one of the very few studies about 

financing strategies utilized by market stallholders. 

 

1. INTRODUCTION 

Micro, small and medium enterprises, or MSMEs, are widely recognized as being the major contributors to 

economic growth, job creation and economic activity in most developed countries. As such, encouraging growth and 

success of MSMEs is vital to the success of the Philippine economy. Based on 2015 statistical data provided by the 

Philippine Statistics Authority (PSA), there are 900,914 establishments in the Philippines. Of these, 99.5% (896,839) 

are micro, small and medium enterprises (MSMEs) and the remaining 0.5% (4,075) are large enterprises.  

MSMEs are defined as any business activity/enterprise engaged in industry, agri-business/services whether 

single proprietorship, cooperative, partnership or corporation whose total assets inclusive of those arising from 

loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated.  

 

Financial Risk and Management Reviews 
2019 Vol. 5, No. 1, pp. 40-54 
ISSN(e): 2411-6408 
ISSN(p): 2412-3404 
DOI: 10.18488/journal.89.2019.51.40.54 
© 2019 Conscientia Beam. All Rights Reserved. 

 
 
 

 
 
 

 

 
 
 
 

https://orcid.org/0000-0002-6937-6802
https://www.doi.org/10.18488/journal.89.2019.51.40.54


Financial Risk and Management Reviews, 2019, 5(1): 40-54 

 

 
41 

© 2019 Conscientia Beam. All Rights Reserved. 

And from that definition, market stallholders fall under the micro entrepreneur’s category because of its 

capitalization. Market stallholders are an integral part of urban economies around the world, offering easy access to 

a wide range of goods and services in public spaces. They sell everything from fresh vegetables to prepared foods, 

from building materials to garments and crafts, from consumer electronics to auto repairs to haircuts. It also adds 

vibrancy to urban life and in many places and it is considered a cornerstone of historical and cultural heritage. For 

example, market stallholders who sell “kakanin” is an important part of Philippines’ cultural heritage. Moreover, 

market stallholders provide the main source of income for their households, bringing food to their families and 

paying school fees for their children.  

However, market stallholders do experience different financial difficulties. The main reason of financial 

difficulty faced by small businesses is the access to affordable credit over a reasonable period.  Another challenge is 

that the market stallholders have limited start-up capital or seed money which leads to low earnings. In addition, 

market stallholders have to face high costs of credit and are usually unable to identify their key competitive 

strengths to maintain product standards and quality. Because of this, knowledge to finance is a topic of continued 

interest among researchers in both developing and developed economies.  

Despite the fact that these market stallholders have been identified as an integral part of our economy, there are 

several constraints serving as bottlenecks to them in accessing financing strategies. Market stallholders used 

different financing strategies such as internal financing, debt financing and equity financing. Mejorada (2009) 

defined internal financing as funds that comes from within the business such as personal funds, working capital, 

retained profits, funds from family and friends and selling of assets. Meanwhile, debt financing are funds raised by a 

company by selling bonds, bills or notes to individual and/or institutional investors. In return for lending the 

money, the individuals or institutions become creditors and receive a promise to repay principal or interest. On the 

other hand, equity financing refers to the sale of an ownership interest to raise funds for business purposes.  

With this, the researcher got interested in conducting the study because the researcher wants to know the 

financing strategies used by market stallholders and how they are utilizing it when they experience financial 

difficulties. The researcher believes that this study will help market stallholders acquire knowledge and consider the 

different financing strategies that could unravel their financial difficulties. This study also aims to provide them 

significant information that will help their business continue and grow. 

 

1.1. Statement of the Problem 

The study aims to correlate financial difficulties and financing strategies among market stallholders in 

Batangas City. Specifically, the study aims to know: 

What is the profile of respondents in terms of: 

A. Personal  

1.1. Age; 

1.2. Sex; 

1.3. Civil status; and  

1.4. Highest educational attainment? 

B. Business 

1.5. Capitalization; 

1.6. Market section; 

1.7. Number of years in operation; 

1.8. Average monthly business income; and  

1.9. Stall location? 

2. How do the respondents assess the occurrence of financial difficulties experienced by market stallholders?  

3. To what extent do the market stallholders utilize the following financing strategies in terms of: 



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3.1. internal financing; 

3.2. Debt Financing? 

4. Is there a significant correlation between the financial difficulties and financing strategies?  

5. Is there a significant difference on the financial difficulties experienced by market stall holders when grouped 

according to profile? 

6. Is there a significant difference on the extent of utilization of financing strategies when grouped according to 

profile? 

7. Based from the findings, what extension activity may be proposed?  

 

2. THEORETICAL FRAMEWORK 

A theoretical framework guides research by determining what variables to measure and what statistical 

relationship to look for. The theoretical framework that is presented here under shows the researcher’s objective to 

identify the correlation between financial difficulties and financing strategies among market stallholders in 

Batangas City.  

For the first variable which is financial difficulties, the researcher has identified the different financial 

difficulties experienced by market stallholders. Then, the respondents assessed the occurrence of these financial 

difficulties on their business. According to Naidu (2012) MSME’s is the main engine behind economic growth. But 

these MSME’s experienced problems regarding the lack of finance to sustain the economic growth of the business. 

Additionally, Singh and Wasdani (2016) posited that financial challenge has been a concern for all stakeholders 

including entrepreneurs, financial institutions and government organizations.  

Moreover, Aruna (2015) states small businesses often face a variety of problems related to their size. A frequent 

cause of bankruptcy is undercapitalization. This is often a result of poor planning rather than economic conditions. 

It is a common rule of thumb that the entrepreneur should have access to a sum of money at least equal to the 

projected revenue for the first year of business in addition to his anticipated expenses. Hence, the researcher felt 

that this theory would support her claim. 

The second variable for this study is the financing strategies. This study utilized the traditional Pecking Order 

theory which was first introduced by Donaldson (1961) and popularized by Myers and Majluf (1984).  In the 

traditional pecking order, businesses prefer internal financing when available, and debt is preferred over equity if 

external financing is required. According to Estwick (2013) the fact that the pecking order theory is based on 

assumptions of information asymmetry which are high in most, smaller, start-up firms, is a good reason to expect 

that it should also apply to small businesses, and not just too large companies. 

However, although this original Pecking Order theory generally applies to SMEs, it was later found that it did 

not hold for all firms, especially small high growth firms. This could be attributed to different reasons, including 

capital market development, a desire to maintain control, and cultural preferences. As a consequence, variations of 

the traditional pecking order sprouted throughout the years. As a matter of fact, Paul et al. (2007) suggested that 

the hierarchy of financing sources starts with internal financing, followed by equity financing, then debt financing. 

Furthermore, Padachi et al. (2012) suggested a constrained pecking order for small businesses where equity 

financing is not considered as a financing source.  

Additionally, Hussain and Matlay (2007) assert that small firms strive for external financial sources only if the 

internal sources are exhausted. Small firms try to meet their financial needs with a pecking order of personal and 

retained earnings, debt and issuance of new equity. The pecking order theory can be easily applied in small firms 

because they borrow based on investment needs rather than the attempt to achieve an optimal capital structure. 

The researcher believed that this theory supported this study because it showed the different financing 

strategies particularly internal, debt and equity financing which were used by businesses to suffice their needs. Also, 

this theory revealed some of reasons why businesses preferred particular financing strategy over the other. 



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However, the researcher did not include equity financing because most of them do not have stocks to sell, hence, it 

is not applicable for market stallholders. 

 

2.1. Research Hypotheses 

Ho1: There is no correlation between financial difficulties and financing strategies. 

Ho2: There is no significant difference on the occurrence of financial difficulties experienced by market stallholders 

when grouped according to profile. 

Ho3: There is no significant difference on the extent of utilization of financing strategies when grouped according to 

profile. 

 

3. METHODOLOGY  

This study is concerned with the correlation between financial difficulties and financing strategies among 

market stallholders in Batangas City. To attain such concern, the method used in the study is the descriptive 

method. According to Calderon (2008) descriptive method also known as statistical research, it describes data and 

characteristics about the phenomenon or population being studied. This research method is used in frequencies, 

averages and other statistical calculations. This method is used to gather information in order to test hypothesis or 

to answer questions concerning the current status of the subject of the study.  

 

3.1. Area of the Study 

The area of the study is the Public Market I and II located at Batangas City, Philippines. 

 

3.2. Population and Sample Size of the Study 

The total population for the study is 1,259 market stallholders in which 295 respondents were used. In 

addition, the study utilized Raosoft calculator to determine its sample size. 

 

3.3. Research Instrument 

The researcher utilized a self-constructed questionnaire using the five-point Likert Scale format of always, 

often, seldom and never for financial difficulties and great extent, moderate extent, least extent and no extent for 

financing strategies. 

 

4. DATA PRESENTATION AND ANALYSIS 

The data gathered in this study were presented in simple table frequency. Pearson r, independent t-test and 

one-way analysis of variance were used to test the hypotheses. 

 

4.1. Personal Profile of the Respondents 

 The personal profile of the market stallholders considered in this study are age, sex, civil status and 

highest educational attainment. 

 

4.1.1. Age 

In terms of age as shown in Table 1, 36 to 55 years old got the highest frequency of 210 or 71.2 percent of the 

total responses. This was followed by 18 to 35 years old with 65 or 22.0 percent of total responses. Lastly, 56 years 

old and above got the lowest distribution of 20 or 6.80 percent of total responses.  

 

 

 



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Table-1. Distribution of Respondents in terms of Age. 

Age Frequency Percentage 

18-35 65 22.0 
36-55 210 71.2 

56 and above 20 6.8 

Total 295 100 
 

 

This manifested that most market stallholders were dominated by the age of 36 to 55. According to Erikson 

(1965) “Theory of Psychosocial Development”, at this age, respondents have stable mindset to raise their family and 

support their children at the same time. Hence, they are trying to maintain the stability and growth of their 

business in order for them to support their family financially. Moreover, they are on the stage of fulfilling their 

dreams so they are eager to make their business grow. 

 

4.1.2. Sex 

Table 2 below shows that there are 199 female respondents which correspond to 67.5 percent of the total 

number of responses. On the other hand, male respondents have a total of 96 which is equivalent to 32.5 percent. 

 
Table-2. Distribution of Respondents in Terms of Sex. 

Sex Frequency Percentage 
Male 96 32.5 

Female 199 67.5 

Total 295 100 

                                               

Based on the result, it turned out that female have a bigger number of population than male. It can be implied 

that female have longer patience and more approachable than male. As a market stallholder, you have to deal with 

many kinds of people that usually test your patience. Usually, female stallholders have enough tolerance to deal 

with persistent and annoying customers. They are good in communication rather than male because male is usually 

a one-word person. 

According to Angulo (2017) in her study regarding entrepreneurial culture of Malvar, Batangas that women 

entrepreneurs who are successful do not give up when faced with obstacles and do whatever it takes to make it their 

dreams happen. 

 

4.1.3. Civil Status 

Table 3 shows that married market stallholders have the highest frequency of 242 that is equivalent to 82.0 

percent. It was followed by the single market stallholders who have a frequency of 33 that is equivalent to 11.2 

percent. Next is widowed/widower market stallholders who have a frequency of 14 which is 4.7 percent of the total 

percentage. Lastly, separated market stallholders got the lowest frequency of 6 or 2 percent. 

 
Table-3. Distribution of Respondents in Terms of Civil Status. 

Civil Status Frequency Percentage 

Single 33 11.2 
Married 242 82.0 

Separated 6 2.0 
Widower 14 4.7 

Total 295 100 
 

 

As seen from the result, majority of the market stallholders were married. The researcher observed that 

married market stallholders are very careful when it comes to managing the business because they do want to earn 

profit. That is why they are vigilant when it comes to handling the business since they need to earn for the sake of 



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their family. Moreover, married market stallholders are not afraid of their obligations with regard to borrowing or 

acquiring loans because they have a partner who will help them deal with it. 

According to Mahoney (2010) maintenance of the family unit and the rearing of children have been major 

responsibilities of married women. Additionally, married women are income earners and food provider. That is the 

reason why married women will always find ways on how to earn money. Moreover, unemployment of the husband 

whether caused by illness, economic fluctuation, or labor disputes is a threat to family economic security. Just as he 

hypothesizes that there is an inverse relationship between labor force participation of married women and family 

income, so expect a greater likelihood of employment associated with unemployment of the husband. 

 

4.1.4. Highest Educational Attainment 

Table 4 shows that high school graduates have the highest frequency of 223 with a percentage of 75.6. It was 

followed by vocational with frequency of 48 and a percentage of 16.3. College graduates is next with a frequency of 

12 equivalent to 4.1 percent.  Next are the elementary graduates who got a frequency of 11 which is equivalent to 

3.7 percent. The lowest frequency goes to others with 1 equivalent to 0.3 percent. 

 
Table-4. Distribution of Respondents in Terms of Highest Educational Attainment. 

Highest Educational Attainment Frequency Percentage 

Elementary graduate 11 3.7 
High School graduate  223 75.6 
Vocational  48 16.3 
College Graduate 12 4.1 
Others  1 0.3 

Total  295 100 
 

 

The result implies that majority of the respondents are high school graduates. This suggests that most of the 

respondents are unskilled and non-degree holders. During the researcher’s interview, they stressed that they do not 

have the means to go to higher education because of lack of money. Hence, it is difficult for them to have a decent 

job. However, even though they lack in higher education, they have the means to survive in this competitive world 

and put up a small business. The respondents also told the researcher that their business started with a low capital 

and as the years passed by it became successful. They exerted all their effort, hard work and determination to 

achieve their dreams. 

According to Alfie (2014) poverty and lack of useful employment in the rural areas and the smaller towns drive 

large number of high school graduates to the cities for work and their employment. These high school graduates 

usually own low skills and lack in the level of education required for better paid jobs in the formal sectors. And 

those who do not have economic powers and those who were left-out add on to the statistics of unemployment. 

Hence, in order for these individuals to survive in the competitive world, they sort working in the informal sector of 

the society. And one of the means of livelihood is market vending, as it requires minor financial input and the skills 

involved are low.  

 

4.2. Business Profile of the Respondents 

The study determined the business profile of market stallholders in terms of market section, number of years in 

operation, average monthly business income, and stall location. 

 

4.2.1. Market Section 

Table 5 shows that more than half of the respondents are in the dry section with a frequency of 194 and 

percentage of 65.8. Meanwhile, wet section has a frequency of 101 and percentage of 34.2. The result revealed that 

most of the market stallholders are selling in the dry section part of the market. This dry section is associated with 



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selling dry goods. Meanwhile, wet section pertains to the selling of goods that are associated with water. Fish, 

meat, fruits and vegetables are example of wet goods. This means that most market stallholders prefer to sell dry 

goods since it is more convenient for them. 

 
Table-5. Distribution of Market Stalls in terms of Market Section. 

Market Section Frequency Percentage 

Dry 194 65.8 
Wet 101 34.2 

Total 295 100 

                  

According to Georgiou (2016) the business that will rule the business world belong to those selling dry goods 

such as grocery store, bakery, specialized services to style men’s hair versus women’s hair but with modern twists 

like changing technologies. As mentioned above, these businesses were included in dry section of the market. 

 

4.2.2. Number of Years in Operation 

Table 6 shows that 6 – 10 years have the highest frequency with 147 or 49.8 percent. Market stallholders who 

operate within 1 to 5 years have the second number of respondents with 111 respondents or 37.6 percent. Followed 

by 11 to 15 years with 24 respondents or 8.1 percent. The lowest frequency came from 16 and above which have 13 

respondents only or 4.4 percent. 

 
Table-6. Distribution of Market Stalls in terms of Number of Years in Operation. 

Number of Years in Operation Frequency Percentage 
1-5 111 37.6 

6-10 147 49.8 

11-15 24 8.1 
16 and above 13 4.4 

Total 295 100 
 

 

The researcher observed that majority of the respondents are in business for 6 – 10 years. This can be an 

implication that majority of the market stallholders have stable business. It also shows that even if a tight 

competition exists, they are able to continue, maybe because of the way they manage their business or how they 

manage their finances. Furthermore, the researcher believed that the longer they operate the more knowledge they 

acquire which they can use to secure the survival of their businesses. 

According to Potts (2017) entrepreneurs of small businesses 5 years and up implement measurable financial 

strategies that contributes to the profitability and success of the business.  

 

4.2.3. Average Monthly Income 

Table 7 shows that P10,001-P20,000 have the most number of frequency with 121 or 41 percent of the total. It 

was followed by P10,000 and below with 118 or 40.0 percent. Next is the P20,001-P30,000 with the frequency of 46 

or 15.6 percent. Lastly, P30,00 and above have the lowest frequency of 10 or 3.4 percent of the total respondents. 

The result shows that majority of the market stallholders earn P10,001-P20,000 monthly. This is a good 

amount considering that they have a wide competition in the market. However, this can also be an implication that 

they will have financial difficulties such as difficulty in meeting their obligations. Even though they are earning, 

there are still so many things that they need to pay. Things such as inventories, taxes and even their personal 

interests take part in their income. Since there is possibility of meeting such financial difficulties, market 

stallholders tend to use some financing strategies such as debt financing which involves borrowing of money and 

internal financing which involves the additional capital from the owner’s personal savings. 



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According to the research of  Gutierrez et al. (2014) on the level of utilization of funds sourced from informal 

money lenders among selected vendors in Batangas City, there are times that market stallholders cannot avoid 

borrowing funds. It also doesn’t mean that if you have stable business you will not be experiencing financial 

difficulties. 

 
Table-7. Distribution of Respondents in terms of Average Monthly Income. 

Average Monthly Income Frequency Percentage 

P10,000 and below 118 40.0 
P10,001-20,000 121 41.0 
P20,001-30,000 46 15.6 

P30,001 and above 10 3.4 

Total 295 100 
 

 

4.2.4. Stall Location 

Table 8 shows that majority of the respondents are located in Public Market 2 with a frequency of 158 or 53.6 

percent. Those stalls located in Public Market 1 have a frequency of 137 or 46.4 percent. It is known that Public 

Market 1, also known as Lumang Palengke, is situated at the heart of the city. It is a common ground where people 

easily interact, alive with social and economic activity. 

 
Table-8. Distribution of Market Stalls in terms of Location. 

Stall Location Frequency Percentage 

Public Market 1 137 46.4 
Public Market 2 158 53.6 

Total 295 100 
 

 

According to Fox et al. (2007) location is a mantra for retail success. Store location is a retailer’s most costly 

and long-term marketing mix decision. Unlike a bad pricing or promotional decision, a poor store location 

adversely affects the business. 

 

4.3. Financial Difficulties Experienced by Market Stallholders 

Most businesses face some financial difficulties every day. Many eager micro entrepreneurs start a business 

with limited capital, assuming they will earn big. However, it is rare that small business turns profit overnight. 

Having enough cash to cover the expenses is critical for the success of any business. Micro entrepreneurs often find 

it difficult to access the working capital they need to cover day-to-day operations. With so much responsibility 

resting on the owner’s shoulders and so many issues to deal with on a daily basis, they will start securing loans and 

lines of credit provided by banks, financing institutions and informal lenders. 

Based on the result of Table 9, the composite mean is 3.01 with a verbal interpretation of To a Moderate 

Extent. This shows that market stallholders often experience the financing difficulties presented in the table. This is 

no surprise because surveys have shown that the lack of available financing from financial institutions is one of the 

biggest problems facing small businesses today. This analysis found support from Gumel (2017) which pointed out 

that financing a small business has become one of the main challenges that negate small business success in Nigeria. 

The capital to invest is critical to the growth small businesses’ sustenance and survival. In addition, Gbandi and 

Amissah (2014) found out that the failure of small businesses to access long-term financing is the main source of 

failure of small businesses in Nigeria. Similarly, Dlabay and Burrow (2008) stated that there is no guarantee that 

growth will assure the success of a business. Large businesses run into financial difficulties that may lead to 

bankruptcy. Even the large businesses encounter financial difficulties how much more are those small businesses 

with lower income. 

 



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Table-9. Financial Difficulties Experienced by Market Stallholders. 

Financial Difficulties Weighted mean Verbal 
Interpretation 

1.Incurred losses due to the lack of business skills and education. 3.20 Moderate extent 
2. Shortage of money for the purchase of products to be sold. 3.04 Moderate extent 
3. Lack of access to credit institutions. 3.06 Moderate extent 
4. Insufficient storage facilities. 2.75 Moderate extent 

5. Banks are ready to lend money but market stallholders cannot meet 
their requirements. 

2.87 Moderate extent 

6. Unforeseen expenses. 3.21 Moderate extent 
7. Limited capital. 3.08 Moderate extent 
8. Expenses incurred is higher than the profit. 2.93 Moderate extent 
9. Unpaid debts of the customers. 3.01 Moderate extent 

10. Poor financial management of the business. 2.81 Moderate extent 
11. Low profit. 3.12 Moderate extent 

Composite Mean 3.01 Moderate extent 
 

 

4.4. Extent of Utilization of Financing Strategies among Market Stallholders 

Often the hardest part of starting and operating a business is raising the money for its continuous growth. The 

business owner might have a great and clear idea of how to turn it into successful business. However, if sufficient 

capital cannot be raised, it is unlikely that the business will get off the ground. Businesses need money to operate. It 

is always a desirable situation for any small business that the company revenue will be enough to sustain the 

organization, but that is always not the case. The proactive small business owner is constantly searching out 

sources of finance to fund new projects and ongoing operations. In this regard, the study assessed the extent of 

utilization of financing strategies among market stallholders with regards to internal financing and debt financing. 

 

4.4.1. Internal Financing 

Internal financing is getting necessary things done using what you have right now or taking advantage of the 

resources available in the business. It is like cash drawn from a company’s operating budget or capital income to 

fund a project or expansion and maybe the simplest form of financing strategy. Moreover, this allows the company 

to make decisions quickly while avoiding the wait for financing approval and avoiding the cost of paying interests 

or dividends. 

 
Table-10. Extent of Utilization of Internal Financing by Market Stallholders. 

Internal Financing Weighted mean Verbal Interpretation 

1. Reinvests profits. 2.87 Moderate Extent 
2. Sells surplus inventories. 2.99 Moderate Extent 
3. Sells idle fixed assets. 2.74 Moderate Extent 
4. Accelerates collection of trade receivables. 3.08 Moderate Extent 
5. Delays payment of trade payables. 3.02 Moderate Extent 
6. Utilizes government grants and subsidies. 3.07 Moderate Extent 

Composite Mean 2.96 Moderate Extent 
 

 

Table 10 has a composite mean of 2.96 which reveals that internal financing is being utilized by market 

stallholders to a moderate extent. This is of no surprise because as Katz and Green (2014) pointed out, internal 

financing is common among small business start-ups either because external equity capital is not available for most 

small business start-ups; banks basically do not loan to start-up businesses; owners often do not want to share 

ownership; owners usually want to be their own bosses; or because owners typically do not want to be responsible 

to others for losses of the business. Through the use of internal financing, business owners have the advantage of 

planning more carefully and make more judicious decisions. 



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The table shows that the market stallholders accelerate the collection of their receivable to a moderate extent 

which shows the highest weighted mean of 3.08. This shows that the market stallholders view chasing credit 

customers as an ideal way of releasing funds for reinvestment in the business. Hisrich et al. (2013) noted that 

collecting bills more quickly is indeed a method of generating funds internally and advised key account holders not 

to be irritated by implementation of this practice, as certain customers have established payment practices. 

Collection procedures include but are not limited to collection processes such as sending a letter of demand, follow 

up calls, collection agency, and legal action (Moyer et al., 2009). 

 

4.4.2. Debt Financing 

The most common source of capital for established ongoing small business is debt financing. This is the case 

for several reasons, including the simple fact that small businesses do not have easy access to new equity. Table 11 

presents the extent financing strategies are utilized in terms of debt financing. 

Based on the result, the composite mean of 2.91 expresses that market stallholders has moderate extent of 

utilization of debt financing strategy. This is an indication that majority of market stallholders are trying to avoid 

debt financing or borrowing of money as much as possible. The researcher believed that majority of the market 

stallholders are afraid to rely on debt financing or borrowing but every time they have financial difficulties, they 

resort in borrowing money to support their business operations and their everyday life. This is supported by 

Hussain et.al as cited by Obuya (2016) which states that debt financing aimed at improving business earnings, first 

to recover its cost, then benefit the proprietors and retain surplus. It is also utilized by both startups and existing 

enterprises to get out of tough economic conditions. In addition, Cuñat and Emilia (2012) asserted that debt 

financing may be necessary when MSME’s face cash inflows problems that hampers the growth of the business. 
 

Table-11. Extent of Utilization of Debt Financing by Market Stallholders. 

Debt Financing Weighted 
mean 

Verbal 
Interpretation 

1.Utilizes trade credit. 
 

2.94 Moderate Extent 

2. Lends from loan sharks. 
 

2.99 Moderate Extent 

3. Loans from another owner. 2.96 Moderate Extent 
4. Loans from family members and friends. 3.09 Moderate Extent 
5. Avail loans from a commercial bank. 2.93 Moderate Extent 
6. Avail loans from a non-bank financial institution. 2.91 Moderate Extent 
7. Lends from government agencies that grants loan. 2.93 Moderate Extent 
8. Loans from other businesses. 2.85 Moderate Extent 

9.Consider loans from employees that are not owners. 2.72 Moderate Extent 
10. Consider loans from other persons not associated with its 
management. 

2.73 Moderate Extent 

11.Borrows money from friends in exchange of valuable items as 
collateral. 

2.98 Moderate Extent 

Composite Mean 2.91 Moderate Extent 
 

 

4.5. Correlation between Financial difficulties and Financing Strategies 

Table 12 presents the correlation between financial difficulties encountered by market stallholders and 

financing strategies used by the respondents. Looking on the p-values, both internal financing and debt financing 

strategies have p-values of 0.000 which is less than the 5 percent level of significance. With this, the null hypotheses 

were rejected. This connotes that there is correlation between financial difficulties and internal financing and 

another correlation between financial difficulties and debt financing utilized by market stallholders. Specifically, the 

computed r-value of internal financing of .397 signifies that there is positive relationship between financial 

difficulties and internal financing encountered by market stallholders. This may be implied that as they encountered 



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financial difficulties, the more they utilized the internal financing. It is similar to the findings of Dugguh (2013) 

which stated that small businesses in Nigeria are faced with numerous challenges that resulted to their failure. 

Small businesses must develop strategies that will mitigate challenges and sustain operations.  

 
Table-12. Correlation between Financial Difficulties and Financing Strategies. 

Financing Strategies p-values Computed r-Values Decision on Ho Verbal Interpretation 

Internal Financing <.001 0.397 Reject Significant 
Debt Financing <.001 0.567 Reject Significant 

 

 

Furthermore, the computed r-value of debt financing equal to .567 indicates that there is moderate positive 

relationship between financial difficulties and utilization of debt financing strategies. This implied that as the 

market stallholders encountered financial difficulties the more they utilize debt financing strategies in moderate 

basis. 

This observation was supported by the study of Gorodnichenko and Schnitzer (2013) which states that 

whenever small businesses meet financial constraints related to financial difficulties, most businesses would resort 

to external finance to finance their investments. This means that there is a positive correlation between financial 

difficulties and financing strategies among small businesses. 

 

4.6. Significant Difference on Financial Difficulties Experienced by Market Stallholders in Terms of Profile 

Table 13 shows that the financial difficulties with p-values of .01 for sex, .000 for educational attainment, .008 

for years in operation, and <.001 for stall location were lower than .05 level of significance, then the computed 

values of -2.486, 5.65, 4.011, and 4.04 revealed that there is significant difference on the assessment of market 

stallholders on financial difficulties when grouped according to sex, educational attainment, years in operation and 

stall location. Thus, the null hypothesis was rejected. This reflects that the assessment of male and female, those 

degree holders and not, new and established stalls, and whether located in new and old market differ on financial 

difficulties. This could mean that in operating a business, sex and education is important. Moreover, the experience 

of market stallholders in managing their business also signifies vitality to the business. Meanwhile, location proved 

to be the mantra of success in business. The researcher also interviewed the market stallholders and they revealed 

that education and business experience do matter and if you have determined to reach your goal then you will 

succeed. According to Ademola and Michael (2012) education and professional qualification, skills and experience of 

owners and managers contribute to the success of Nigerian small businesses. 

 
Table-13. Difference in the Financial Difficulties experienced by the Market Stallholders in Terms of Profile. 

Variables p-values Computed f-Values Decision on Ho Verbal Interpretation 

Age .78 .25 Failed to Reject Not Significant 

Sex .01 -2.486 Reject Significant 
Civil status .60 .62 Failed to Reject Not Significant 

Highest Educational 
attainment 

 
<.001 

5.65 Reject Significant 

Market Section .37 -0.894 Failed to Reject Not Significant 

Numbers of Years in 
operation 

.008 4.011 Reject Significant 

Income .34 1.14 Failed to Reject Not Significant 
Stall location <.001 4.04 Reject Significant 

    *t-values. 

 

4.7. Difference in the Extent of Utilization of Financing Strategies 

Table 14 shows that the extent of utilization of financing strategies with p-values of .039 for sex, <.001 for civil 

status, <.001 for educational attainment, .004 for years in operation, .004 for income, and <.001 for stall location 



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were lower than .05 level of significance, then the computed values of -2.076, 8.18, 5.43, 4.51, 4.58, and 6.166 

revealed that there is significant difference on the assessment of market stallholders on the extent of internal 

financing strategies when grouped according to sex, civil status, educational attainment, years in operation, income, 

and stall location. Thus, the null hypothesis was rejected. This reflects that the assessment of male and female, 

single and married, degree holders and not, new and established stalls, low and high monthly income, and whether 

in old or new market differ with regards to internal financing. This could mean that when it comes to the utilization 

of internal financing, sex, civil status, educational attainment, number of years in operation, average monthly 

business income and stall location is important. In terms of sex, Udofot and John (2017) stated that women have 

innovativeness, perseverance, problem-solving ability and the ability of empathy with their customers than men 

owners and managers in Nigeria. Further, they found out that women are aware of ethical issues in small business 

management and always act to minimize ethical problems. 

 
Table-14. Difference in the Extent of Utilization of Internal Financing in terms of Profile. 

Variables p-values Computed f-Values Decision on Ho Verbal Interpretation 

Age .066 2.75 Failed to Reject Not Significant 
Sex .039 -2.076 Reject Significant 

Civil status <.001 8.18 Reject Significant 
Educational attainment <.001 5.43 Reject Significant 

Market Section .12 -1.57 Failed to Reject Not Significant 
Number of Years in operation .004 4.51 Reject Significant 

Income .004 4.58 Reject Significant 
Stall location <.001 6.166 Reject Significant 

 

 

On the other hand, the table presents that the extent of utilization of internal financing strategies with p-values 

of .066 for age and .12 for section were both higher than .05 level of significance, then the computed values of 2.75 

and -1.57 revealed that there were no significant differences on the assessment of the market stallholders on the 

utilization of financing strategies when grouped according to age and section. Thus, the study failed to reject the 

null hypothesis. This implies that the assessment of young and old owners and wet or dry section on internal 

financing do not differ.  This could be because whether the market stallholders are young or old, they could still be 

successful in business. According to Lee et al. (2016) age is one of the contributing factors that influence the success 

of the business in Seoul, Korea. 

Meanwhile, as shown on Table 15, extent of utilization of debt financing strategies with p-values of .002 for 

sex, .004 for civil status, .044 for educational attainment, .02 for market section, .000 for years in operation, and .000 

for stall location were all lower than .05 level of significance, then the computed values of -3.177, 4.58, 2.48, 2.34, 

7.42, and 6.77 revealed that there is significant difference on the assessment of the market stallholders on the 

utilization of debt financing when grouped according to sex, civil status, educational attainment, market section, 

number of years in operation and stall location. Thus, the null hypothesis was rejected. This reflects that the 

assessment of male and female, single and married, degree holders or not, wet and dry section, new and established 

stalls, and old or new market differ with regards to utilization of debt financing. This could mean that sex, civil 

status, educational attainment, market section, number of years in operation and stall location are factors to 

consider utilizing debt financing during financial struggles. According to Gumel (2017) educational qualification of 

owners and managers play a role in the success of small business, but their experience is more important in 

determining the success of operations.  

 

 

 

 

 



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Table-15. Difference in the Extent of Utilization of Debt Financing in terms of Profile. 

Variables p-values Computed f-Values Decision on Ho 
Verbal 

Interpretation 

Age .06 2.85 Failed to Reject Not Significant 
Sex .002 -3.177 Reject Significant 
Civil status .004 4.58 Reject Significant 
Highest Educational attainment .044 2.48 Reject Significant 
Market Section .02 2.34 Reject Significant 
Number of Years in operation <.001 7.42 Reject Significant 
Average Monthly Business Income .34 1.14 Failed to Reject Not Significant 
Stall location <.001 6.77 Reject Significant 

   *t-values 

 

Meanwhile, the table presents that the extent of utilization of debt financing with p-values of .06 for age and 

.34 for monthly income were both higher than .05 level of significance, then the computed values of 2.85 and 1.14 

revealed that there were no significant differences on the assessment of the market stallholders on the utilization of 

debt financing when grouped according to age and monthly income. Thus, the study failed to reject the null 

hypothesis. This implies that the assessment of young and old and low or high income on debt financing do not 

differ. According to Gumel (2017) the age of owners and managers who recorded success are above twenty years. 

He also revealed that age has no significant relationship with the success of the business. 

Moreover, Davydov et al. (2014) states that debt financing is a key element in a firm’s choice of its capital 

structure. By generating revenues that would not have been reached without additional funding, external financing 

in a form of debt or equity capital allows firms to increase firm value, which is traditionally considered an ultimate 

goal of every business. 

 

4.8. Proposed Extension Activity to Market Stallholders 

While micro business may not generate as much money as large corporation, they are a critical component and 

major contributor to the strength of local economies. Micro business present new employment opportunities and 

serve as building blocks of the largest corporations in the country. Market stallholders being categorized micro 

entrepreneurs have been of big help to the economy of the Philippines. It is therefore important to analyze and give 

emphasis to their weaknesses as shown in this study. 

After reviewing the information gathered from the study, the researcher proposed an extension program that 

will augment the market stallholder’s weaknesses and improve their knowledge on how to handle their business as 

shown in Table 14. The researcher believes that an extension program will enlighten them and enhance their 

knowledge on how to handle their finances effectively. 

This extension program will cover the tackled issues of the study as well as weaknesses discovered by the 

researcher. The objective of this extension program is to educate these market stallholders about financial 

management and the advantages of borrowing additional funds to banks and other financing institutions.  

Moreover, the topics on the areas of financial management, SWOT analysis and banking and financial institutions 

will serve as their guide in choosing the right financing strategy when they experience financial difficulties. 

 

Funding: This study received no specific financial support.    
Competing Interests: The author declares that there are no conflicts of interests regarding the publication 
of this paper. 

 

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