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Financial Inclusion or Exploitation? An Integrative Review of Online Lending Applications (OLAs) in the Philippines: Analyzing User Experiences, Regulatory Challenges, and Implications for Consumer Protection

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  • Villarino, Resti Tito

    (Cebu Technological University)

  • Villarino, Maureen Lorence

Abstract

Background: Online lending applications (OLAs) are rapidly gaining traction in the Philippines, offering previously unbanked individuals access to credit. However, this burgeoning sector is now under scrutiny due to numerous allegations of predatory practices, harassment, and even public shaming, raising significant concerns. Objective: This integrated review critically examines the landscape of OLAs in the Philippines, focusing on user experiences, regulatory constraints, and considerations related to financial equity and consumer protection. Methods: The authors followed Whittemore and Knafl's (2005) integrative review methodology, analyzing app ratings and reviews for 40 OLAs listed in the Google Play Store from January 1, 2024, to July 31, 2024. Cross-referencing was performed using the Securities and Exchange Commission (SEC) registration data. The analysis was conducted using IBM SPSS version 26 and MAXQDA version 2020. Results: The review found that 80% (32 out of 40) of OLAs were moderately rated (3.5-4.4 out of 5.0), suggesting general user satisfaction. However, only 25% (10 out of 40) of these OLAs were registered with the SEC. Critical themes such as high interest rates, hidden charges, and aggressive collection practices were more prevalent among non-registered OLAs. The absence of highly negative ratings (below 2.4) suggests possible rating manipulations. Thematic analysis revealed positive themes like convenience, speed, and accessibility, contrasted by negative themes including predatory practices, lack of transparency, and poor customer service. Conclusion: The OLA landscape in the Philippines is complex, balancing the need for accessible credit with the imperative of stronger regulatory oversight and consumer protection. This review highlights the necessity of enhancing regulatory monitoring and consumer safeguards to ensure financial innovation benefits vulnerable borrowers without exposing them to undue risk. Keywords: consumer protection, digital financial literacy, financial inclusion, fintech regulation, online lending in the Philippines, predatory practices

Suggested Citation

  • Villarino, Resti Tito & Villarino, Maureen Lorence, 2024. "Financial Inclusion or Exploitation? An Integrative Review of Online Lending Applications (OLAs) in the Philippines: Analyzing User Experiences, Regulatory Challenges, and Implications for Consumer Pr," OSF Preprints nr456_v1, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:nr456_v1
    DOI: 10.31219/osf.io/nr456_v1
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    References listed on IDEAS

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    1. Peterson K. Ozili, 2018. "Impact of digital finance on financial inclusion and stability," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 329-340, December.
    2. Jian Mou & J. Christopher Westland & Tuan Q. Phan & Tianhui Tan, 2020. "Microlending on mobile social credit platforms: an exploratory study using Philippine loan contracts," Electronic Commerce Research, Springer, vol. 20(1), pages 173-196, March.
    3. Ozili, Peterson Kitakogelu, 2018. "Impact of Digital Finance on Financial Inclusion and Stability," MPRA Paper 84771, University Library of Munich, Germany.
    4. Llanto, Gilberto M. & Rosellon, Maureen Ane D. & Ortiz, Ma. Kristina P., 2018. "E-Finance in the Philippines: Status and Prospects for Digital Financial Inclusion," Discussion Papers DP 2018-22, Philippine Institute for Development Studies.
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