ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Chapter 1

THE PROBLEM AND ITS SETTINGS

This chapter presents the background of the study, statement of the

problem, the theories and the conceptual framework where the objectives and

the problems is anchored, the significance of the study, the scope and

limitations, and the terms used which defined conceptually or operationally.

Introduction

Micro, Small, and Medium Enterprises (MSMEs) serve as the backbone

of local economies, providing employment, driving innovation, and

contributing to economic growth. However, many MSMEs struggle with

financial management, affecting their sustainability and growth potential. In

Odiongan, Romblon, MSMEs face challenges such as limited access to credit,

ineffective budgeting, inadequate record-keeping, and lack of investment

strategies. Addressing these gaps is crucial to ensuring long-term viability and

competitiveness.

Micro, small, and medium enterprises (MSMEs) are crucial in various

countries' economic growth and profitability development (Mveku et al., 2023).

According to the Department of Trade and Industry (Brilliantes et al., 2020),

the MSME sector in the Philippines contributed 35.7% of the total value

1
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

added, with small businesses contributing 20.5%, micro-enterprises at 4.9%,

and medium firms at 10.3%. The presence of MSMEs in national development

has a strategic role in the absorption of labour, for it contributes approximately

64.67% of employment, providing 5,461,731 jobs. However, the industry faces

challenges, such as limitations and the inability to apply appropriate financial

management practices, including a lack of access to finance and the need for

awareness of compliance with financial accounting standards (Barbosa, 2021;

Hafizi et al., 2023; Sappor et al., 2023; Alam et al., 2023; Bashokoh et al.,

2023).

Financial management practices encompass various aspects such as

working capital, inventory management, and financial planning, which are

crucial for assessing business performance and profitability. As Corpuz and

Bool (2021) and Hailu et al. (2016) highlight, these practices are essential for

adequate money and asset management. Despite the significance of financial

management, many businesses fail due to a lack of understanding, focusing

solely on total sales rather than net income or loss. Proper strategies and

management control are often neglected, emphasizing the hardships, time,

and effort required for effective financial management (Amoako, 2013; Sanga

et al., 2014).

In recognizing the significance of MSMEs, this study explores the

understanding and knowledge of MSMEs in Odiongan, Romblonn regarding

compliance with Financial Accounting Standards (FAS) and Financial

2
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Management Practices (FMP). It aims to determine the relationship between

FAS, FMP, and business success. The study intends to benefit MSME owners

by providing decision-making knowledge in financial management and

accounting standards, ultimately improving business performance. Aspiring

entrepreneurs can also benefit by gaining insights into prominent areas for

focus and improvement before startup, reducing potential problems because it

gives a person the ability to be more confident and insightful with their

decisions (Susanti & Widiastuti, 2021). This study addresses a gap in

previous research by focusing on micro-sized businesses. It aims to

contribute valuable insights to reduce business failure, aligning with Zotorvie's

(2017) and Hafizi et al.'s (2023) recommendations

Background of the Study

Micro, Small, and Medium Enterprises (MSMEs) are pivotal to global

economic development, contributing significantly to employment and GDP.

According to the World Bank, MSMEs represent about 90% of businesses

and more than 50% of employment worldwide. In the Philippines, the MSME

sector is a vital component of the economy, comprising 99.5% of total

enterprises and employing 63.2% of the workforce.

Despite their substantial role, MSMEs often encounter challenges in

financial management and accessing growth opportunities. Effective financial

practices, such as accurate bookkeeping, budgeting, and strategic financial

3
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

planning, are essential for the sustainability and expansion of these

enterprises. However, many MSMEs lack the necessary financial literacy and

infrastructure to implement sound financial practices, leading to issues like

poor cash flow management and inadequate capital allocation. A study by

Anoos et al. (2020) highlighted that financial practices deemed important by

academics are not always implemented by MSMEs, underscoring a gap

between theoretical knowledge and practical application.

Access to finance remains a significant barrier for MSMEs. The financial

gap refers to the disparity between the financial requirements of MSMEs and

their capacity to secure adequate financing options. This gap hinders their

ability to invest in growth opportunities, innovate, and compete in broader

markets. Sharma and Sharma (2024) emphasized that understanding the

factors contributing to this financial gap is crucial for developing effective

solutions to bridge it.

Financial literacy plays a critical role in enhancing MSME performance.

Entrepreneurs with a strong understanding of financial management are

better equipped to make informed decisions, leading to improved business

outcomes. Research indicates that financial literacy positively influences

MSME performance by enabling better financial decision-making and

resource management. A study published in the Journal of the Knowledge

Economy (2024) analyzed key empirical studies and found that financial

literacy significantly impacts the growth and sustainability of MSMEs.

4
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

External factors, such as government policies and market conditions,

also influence the growth opportunities available to MSMEs. For instance,

financial innovations like fintech have emerged as solutions to financial

exclusion in developing countries, offering novel lending practices to

underserved communities. These innovations can provide MSMEs with

alternative financing options, thereby enhancing their growth prospects. A

study by Chen and Guo (2024) demonstrated that fintech advancements

substantially increase the likelihood of micro and small enterprises engaging

in innovative activities.

In the Philippines, initiatives aimed at improving financial literacy and

access to finance for MSMEs are crucial for economic development. By

addressing the gaps in financial management practices and leveraging

technological advancements, MSMEs can enhance their competitiveness and

contribute more effectively to the national economy.

Theoretical Framework

1.Resource-Based View (Barney, 1991)

The resource-based view (RBV) emphasizes how important internal

resources and capabilities are to a company's success overall (Barney, 1991).

As stated by the resource-based theory of the firm, MSMEs include a mix of

original resources and capabilities (Wernerfelt, 1984). These resources can

be decidedly tangible or remarkably intangible. These resources also

5
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

empower a firm to exploit specific opportunities and diminish specific threats

in the outside environment. The resources should be valuable, rare, hard to

copy, and without substitutes (VRIN) to get an advantage.

The available funds of MSMEs are an important element of their

intended resources. For MSMEs to put money into innovation, grow their

businesses, and make their goods and services better, they must be able to

make their own money and get money from others. Micro, small, and medium-

sized enterprises are able to use a number of available funds in order to make

new products, improve current products, and make more products. This might

let them gain an advantage over other competitors. That could be important.

For example, Honda, the most sizable engine manufacturer on Earth,

possesses an advantage in the engine business due to its many special

attributes as well as capability to produce gasoline engines.

Capabilities are the firm’s ability to use its resources. Capabilities can

refer to managerial skills, organizational culture and innovation, especially in

the context of MSMEs. For instance, in research (Zahra et al. (2006) imply

that companies operating on moving outshines can achieve a competitive

advantage through the dynamic capabilities of their resources. Dynamic

capabilities are the organizational processes or strategic routines employed

by means of corporations to create new configurations of sources in need of

being up to date based on market demand (Eisenhardt & Martin, 2000).

The another key strategic asset for MSMEs is knowledge. They can

6
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

assist companies with better decision-making, product development, and

operational efficiency. A study by Grant, 1996 expressed that Knowledge is

the key strategic asset of firms. According to the knowledge-based view of

the firm, knowledge is the firm's most important resource.

2.Financial Literacy Theory (Huston, 2010)

This Financial Literacy theory is respectively guided by the idea of being

financially literate which is a tool for financially reliable management

particularly in MSMEs. Financial literacy, according to Huston (2010) is the

capacity to effectively manage financial resources to achieve an optimum

level of financial well-being over time, which includes financial knowledge as

well as its application. In case of MSMEs, this means the business owners &

managers have the know-how to understand the financial concepts, read the

financial data pivotal for decision making to achieve business sustainability &

growth.

Financial Literacy and Sound Practices (H1): Central to this framework is

the idea that MSME professionals who are financially literate are more likely

to adopt good financial practices, such as budgeting, financial plans, record-

keeping, and risk management. Say, a person who is financially literate is in a

better position to predict cash flows, evaluate investments' viability, and to

secure the right financing options which are all critical to the sustainability of

the company.

Access to Financial Services (H2): The framework accepts that financial

7
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

literacy on its own is not enough. MSMEs also need to be able to use the

whole range of financial services, which includes the credit, savings, and

insurance. The availability of these services helps micro, small, and medium-

sized enterprises (MSMEs) use their financial education, like the use of credit

for expansion and insurance for risk management.

Business Environment (H3): One of the most important elements of the

framework is the business environment is included. Additionally, the business

environment analysis deals with the regulatory and economic aspects of an

enterprise as well as socio-cultural factors which can influence the company's

financial activities. For instance, small business lending policies of the

government may either positively or negatively affect MSMEs' ability to access

financial services.

Sound Financial Practices and Growth (H4): Finally, the framework

proposes that the MSMEs can only reach the heights of growth if they apply

sound financial practices. To be more precise, great financial supervision can

be a key to a better economy, increased funding, and enhanced operation

capability hence creating the room for expansion and growth.

Conceptual framework

The conceptual framework outlines the relationship between financial

management practices and MSME growth opportunities.

8
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

The figure 1 above, illustrates the conceptual framework of the study.

This figure is important in demonstrating how the process of analyzing

MSMEs Financial Practices and Growth Opportunities in Odiongan, Romblon

was done. This makes it easier to understand the research methodology that

this study employs. This framework suggests that financial management

practices (Independent variables) are associated with better MSME growth

opportunities (dependent variables).

Research Paradigm

Figure 1 can be further illustrated using the INPUT-PROCESS

(THROUGHPUT)-OUTPUT model as shown in the figure 2. The study’s

inputs include the independent variables and the study’s output will be the

dependent variables. It forms the basis of the research to inform the formation

9
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

of research questions, data collection methods, and analysis.

Statement of the problem

This study seeks to answer the primary question:

How do financial management practices impact the growth opportunities

of MSMEs in Odiongan, Romblon?

Specific questions include:

1.What are the current financial management practices among MSMEs in

Odiongan?

2.What challenges do MSMEs face in financial planning, budgeting, and

access to credit?

3.What strategies can be recommended to bridge financial management

10
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

gaps and support MSME growth?

Assumption of the study

The MSME owners in Odiongan, Romblon, possess varying levels of

financial literacy, which influence their financial management practices and

business sustainability. It is assumed that those with higher financial literacy

apply better financial management strategies, leading to improved business

performance and growth. Additionally, MSME owners are aware of financial

challenges such as access to credit, cash flow management, and investment

planning, and they take steps to address these issues. The study assumes

that financial literacy and management practices have a significant impact on

business success, and there is a need for continuous improvement in financial

education programs to support MSME growth in the locality.

Significance of the study

This study explores the financial management practices of micro, small,

and medium enterprises (MSMEs) and their impact on business sustainability

and growth. The findings of this research will be beneficial to the following

stakeholders:

 MSME Owners – This study will help MSME owners improve their

financial management strategies, enabling them to enhance business

sustainability, optimize resources, and achieve long-term growth.

11
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

 Local Government Units (LGUs) – The research provides data-driven

insights that can assist LGUs in formulating policies and business

development programs that support MSMEs, fostering local economic

growth.

 Financial Institutions - Enhanced MSME credit access through targeted

products and risk reduction. Improved understanding of MSME financial

needs for better loan offerings.

 Researchers/Academics- Adds primary data to MSME finance

literature, particularly local data from Odiongan, Romblon. Facilitates

further research and deeper understanding of MSME financial practices.

Scope and Delimitation

This study focuses on MSMEs operating in Odiongan, Romblon,

particularly in retail, agriculture, tourism, and services sectors. It examines

financial management practices, challenges, and growth opportunities.

Limitations:

 The study does not cover large enterprises or informal businesses.

 The research is limited to financial management aspects and does not

explore non-financial growth factors such as marketing or technology

adoption.

Definition of Terms

12
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

 Financial Management Practices: This refers to the various activities

and strategies that MSMEs use to manage their financial resources

effectively. It includes working capital management, inventory

management, financial planning, budgeting, record-keeping, and

investment strategies.

 MSMEs (Micro, Small, and Medium Enterprises): These are businesses

that maintain certain thresholds in terms of asset size and number of

employees. They are crucial contributors to the economy by generating

employment, fostering innovation, and driving economic growth.

 Financial Literacy: The level of understanding and knowledge that

MSME owners and managers have regarding financial concepts and

principles. It includes the ability to make informed financial decisions and

effectively manage financial resources.

 Growth Opportunities: The potential avenues and possibilities for

MSMEs to expand their operations, increase their market share, and

improve their overall business performance. This can include access to

new markets, availability of funding, technological advancements, and

strategic partnerships.

 Financial Gap: The difference between the financial needs of MSMEs

and their ability to obtain adequate funding and financial services. This

gap can hinder their ability to invest in growth opportunities and expand

their businesses.

13
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Chapter 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the review of related literature and recent

studies. To ensure relevance and timeliness, the sources were reviewed and

gathered from sources published between 2019-2025. It presents a synthesis

of sources related to Micro, Small, and Medium Enterprises (MSMEs), with a

focus on financial management practices and growth opportunities.

Related Literature

To present a broad perspective, a collection of options and contexts

from books, journals, websites, and other relevant sources was collected and

categorized into key areas: the significance of MSMEs, challenges faced by

MSMEs, financial management practices and MSMEs performance, and

financial gap and access to finance.

The Significance of MSMEs

According to Tadeo et al. (2023), MSMEs are the backbone of the

Philippine economy. It serves as the foundation of the Philippine Economic-

system, and it have been the topic of great interest from numerous

14
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

governmental agencies and sectors. Furthermore, according to their study,

regions in the Countries should identify and address the weaknesses that

hinder MSMEs growth and job creation. They must enhance their strategy to

grow. In return, it will help them to increase their contribution to the country’s

GDP.

Calingasan et al. (2023), studied and surveyed the Micro Small and

Medium Enterprises (MSMEs) operations in the Municipality of Infanta

Pangasinan. The findings showed that the target market was dominated by

sari-sari stores (46 or 28.40%) and variety stores (57 or 35.19%). A significant

portion of entrepreneurs started their businesses with an initial capital

between ₱15,001–₱50,000 (30.00%) and ₱50,001–₱100,000 (19.00%). Out

of the 162 business registrants, 45.00% of the businesses employed around

3–4 workers. Their research emphasizes a strong need of MSMEs’ support

system, and targeted training to improve MSME sustainability and economic

contribution at the municipal level. There should be a ‘consortium’ among

government sectors, and collaboration with local institutions.

Despite the support of the Philippine government to the MSMEs, their

overall performance remains significantly weak to its ASEAN neighbors. This

means that the MSMEs in the Philippines are underperforming, they lack

productivity and are not competitive enough to secure their place, to

participate effectively in regional and global markets. There is an urgent need

for policy interventions and remedial legislations are needed to enhance

15
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

MSMEs’ competitive advantage. In the absence of such measures, there is a

need to do a re-evaluation of current policy implementation relative to the

advancement of MSMEs' competitive advantage. This is important to improve

the performance of the country. (Nwosu & Umeh, 2021).

Countries around the world have their own growth and development

engines called Micro, Small, and Medium Enterprises (MSMEs), which are

key factors in employment, innovation, and overall economic dynamism. The

Philippines officials thus rate high the significance of this particular sector that

accounts for 99.5% of the total number of enterprises in the country and

employs 63.2% of the workforce.

The Department of Trade and Industry—Brilliantes et al. (2020)—

reported that in terms of value added to the economy, the MSME sector in

the Philippines contributed 35.7%, with small enterprises contributing 20.5%,

micro at 4.9%, and medium at 10.3%. Furthermore, MSMEs are of strategic

importance to national development in labor absorption, as it accounts for

around 64.67% of employment with 5,461,731 jobs created.

Challenges Faced by MSMEs

MSMEs play a vital role in the Philippine economy and it faces many

challenges. Using the PESTLE framework, Duran and Manahan (2024),

present the challenges faced by MSMEs in the Philippines. Economic factors,

such as inflation, currency instability, and high tax rates, have been identified

16
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

as challenges to the growth and sustainability of MSMEs. Furthermore,

despite these factors, the study highlights the potential opportunity of

technological advancements such as the adoption of digital technologies,

especially online tools and artificial intelligence. This provides chances to

improve operations, increase efficiency, and foster customer engagement.

The study also highlights the importance of legal, environmental, and political

factors that influence how MSMEs do business in the Philippines.

“A vibrant and strong micro, small, and medium enterprise (MSME)

sector can reduce poverty and inequality in the country.” Yet, access to

financing is still a significant obstacle for MSMEs in the Philippines, according

to Raquiza (2021). Furthermore, rethinking the government's policy

framework is needed especially in economic governance. Given the state of

MSMEs in the country in the last few decades, the government should take

urgent and bold action to address their lack of access to credit and other

types of support for MSMEs development.

MSMEs are of great importance, yet they face a myriad of challenges

that prevent their growth and sustainability. One of the major challenges is the

limitation in applying appropriate financial management practices. This is

closely linked to problems of access to finance and ignorance, especially in

respect to compliance with financial accounting standards. Effective financial

management practices are necessary for assessing business performance

and profitability. They include aspects such as working capital management,

17
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

inventory management, and financial planning. These are the proper

strategies and management controls; otherwise, it depicts the time and effort

in carrying out proper financial management.

Financial Management Practices and MSMEs Performance

Sound financial management practices are imperative for effective

handling of funds and assets, which in turn engender good business

performance. Nevertheless, many enterprises fail due to a lack of

understanding, usually mistaking total sales for net income or loss. Research

has shown that financial literacy affects the performance of MSMEs in a

positive way through improved financial decision-making and management of

resources. One study published in the Journal of the Knowledge Economy in

2024 reviewed several key empirical studies before arriving at the conclusion

that financial literacy substantially affects growth and sustainability of MSMEs.

The Financial Gap and Access to Finance

Many MSMEs still face a major challenge in accessing finance. The

financial gap is defined as the difference between the financial needs of

MSMEs and their ability to access adequate financing. It is a hindrance to

their ability to invest in growth opportunities, innovate, and compete

effectively. Sharma and Sharma (2024) stated that identifying the various

causes of this financial gap is very important for implementing solutions to

bridge the gap. Financial innovations such as fintech are now viewed as a

18
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

panacea for financial exclusion in developing countries with novel lending

practices for underserved communities. Research by Chen and Guo in 2024

showed that advancements in fintech markedly improved the probability that

micro and small enterprises would innovate.

19
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Chapter 3

RESEARCH METHODOLOGY

This chapter presents the research methodology adopted in conducting

the study. This includes the following: research design, research method,

research locale and time of the study, population, and sample of the study,

research instruments, data gathering procedures, and the methods employed

for data processing and analysis.

Research Design

The study employed a descriptive-correlational research design.

Wherein qualitative and quantitative research techniques are used in the

study. In order to provide empirical evidence and validate the research

findings, this design is appropriate. The descriptive feature was used to

provide details of the financial management practices of MSMEs in Odiongan,

Romblon. The correlational component, on the other hand, is to test the

association of financial management practices with growth opportunities.

Research Method

The study used the mixed-method approach. This approach combines

quantitative and qualitative methodologies, providing the advantages of

20
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

numerical analysis and textual data. Quantitative data by means of structured

survey questionnaires. While qualitative data by means of textual responses

from respondents interviews that explored underlying perspectives and

contextual interpretations of financial management practices.

Research Locale and Time of the Study

This study will take place in the Municipality of Odiongan, Romblon,

Philippines. The town is home to a wide variety of MSMEs engaged in sectors

such as retail, agriculture, tourism, and services sectors. The locale was

chosen due to its economic diversity and strategic relevance to the study’s

objectives. Odiongan presents a rich and diverse economic landscape, where

MSMEs owners encounter both challenges and growth opportunities. Figure 3

shows the map where the study will be conducted.

21
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Figure 3: Map of the Study

This study will be conducted throughout the 2024–2025 academic

year. The Municipality of Odiongan, Romblon is politically subdivided into 25

barangays. Using the fishbowl method, 5 barangays were randomly picked,

namely: Dapawan, Ligaya, Liwayway, Mayha, and Tulay.

The Respondents of the Study

This study focuses on 1,000 micro, small, and medium enterprises

(MSMEs) that are officially registered and located in five barangays of

Odiongan, Romblon—specifically Liwayway, Tulay, Mayha, Dapawan, and

22
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Ligaya. To be part of the target group, businesses must be registered with

the Department of Trade and Industry (DTI) and have been in operation for at

least one year.

Inclusion Criteria:

1. Registered with DTI and located in any of the five specified barangays.

2. Employ between 1 to 99 people.

3. Operating since 2023 or earlier.

4. Open to sharing their financial data.

Exclusion Criteria:

1. Unregistered or informal businesses.

2. Businesses located outside the selected barangays.

3. Companies currently being liquidated.

4. Franchises that manage finances centrally.

Sample Size Determination

To get a representative sample, Slovin’s formula was used. With a

confidence level of 95% and a 5% margin of error, the ideal sample size was

23
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

calculated to be 278. This means that out of the 1,000 total MSMEs, 278 will

be surveyed.

Stratified Sampling and Sectoral Breakdown

From the total population, 278 MSMEs will be selected using stratified

random sampling to ensure each sector is fairly represented. This sample

makes up 27.8% of the entire population—well above the commonly

accepted minimum of 10%, ensuring the data is solid and reliable.

Breakdown by Sector:

Sector Percentages Sample Count

Retail Trade 38% 106 businesses
Food Services 25% 70 businesses
Agri-based
Products 20% 56 businesses
Handicrafts 12% 33 businesses
Manufacturing 5% 13 businesses

24
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

This approach also ensures that niche groups like marble producers

(15% of manufacturing) and coconut processors (30% of agri-based) are

represented. Final respondents will be randomly selected from each category

to maintain the integrity of the data.

Research Instrument Used

The research made use of a survey questionnaire that was adapted

from established financial management assessment tools, modified to suit

the specific conditions and needs of Micro, Small, and Medium Enterprises

(MSMEs) based on existing MSME development models. This instrument

was designed to collect relevant and accurate data on the financial

behaviors, knowledge, access to financial services, and perceived growth

opportunities of MSMEs in the municipality of Odiongan, Romblon.

Nature and Purpose

The main purpose of the instrument was to assess the financial

practices and potential for business growth among local MSMEs. The

questionnaire was divided into six sections to ensure a comprehensive

analysis of each respondent’s financial profile and business outlook.

Part I gathered demographic and enterprise-related information such

as the respondent’s age, gender, educational background, number of years

25
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

in business, industry type, number of employees, and whether the business

was formally registered.

Part II focused on examining financial management practices,

specifically the regularity and use of budgeting, bookkeeping, cash flow

tracking, inventory control, and financial planning. Part III assessed the

respondents’ financial literacy and competencies, determining their level of

understanding in areas like interest computation, loan terms, financial

statements, and budgeting techniques.

Part IV looked into the availability and usage of financial services such

as loans, banking facilities, insurance, and digital finance platforms. Part V

addressed the business owners’ perceived opportunities for growth, including

their plans for expansion and investment. Lastly, Part VI collected qualitative

data on the financial challenges they face and their suggestions for improving

financial management within their enterprises.

Formulation

The development of the survey instrument involved adopting and

revising questions from existing financial assessment tools focused on

MSMEs, ensuring they were suitable for the local setting of Odiongan. The

research team carefully refined the questionnaire items to reflect local

language, context, and typical MSME practices. These modifications were

made to enhance the clarity, relevance, and accessibility of the questions,

26
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

ensuring that respondents could provide accurate and thoughtful answers.

The result was a reliable and well-contextualized tool capable of capturing

meaningful insights into the financial management capabilities and

development prospects of MSMEs in the area.

Validation and Reliability

Upon approval of this research proposal, the researchers will consult

with a qualified statistician to validate the research instrument in terms of its

content, structure and clarity. The internal consistency of the questionnaire

will be checked.

Administration

Upon securing the necessary approval from the university. Approval

from the municipal office will be secured, a letter to the municipal Mayor of

Odiongan will be sent and a letter to each barangay Captain will be sent. The

questionnaires will be administered in person by the researchers.

Ethical Consideration

Informed consent will be obtained from all respondents, and

confidentiality of responses will be strictly observed.

Data Gathering Procedure

Data gathering process will consist of the following stages:

27
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

1. Preliminary Coordination: The researchers will coordinate with the

Department of Trade and Industry (DTI) and the Odiongan LGU to get

the list of qualified MSMEs.

2. Distribution of Instruments: The validated survey questionnaires will be

distributed personally by the researchers to the selected MSMEs.

3. Follow-Up and Retrieval: The researchers will retrieve the completed

questionnaires and address any concerns from the respondents.

4. Data Preparation: Collected data will be encoded and organized in

preparation for the analysis of the study.

Data Processing and Analysis

The study will employ both descriptive and inferential statistical

methods to analyze the collected data, ensuring that numerical trends and

relationships between variables are systematically examined. The survey

instrument, comprising a mix of nominal, ordinal, and open-ended questions,

plays a crucial role in measuring various aspects of financial management

practices and their perceived impact on the growth of MSMEs.

References:

28
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Calingasan, L. H., Martin Jr., N. A., Ventayen, R. J. M., Evangelista, I. D.,

Ferrer, R.-J. S., & Martinez, R. D. (2023). Entrepreneurial Sustainability of
Micro, Small, and Medium Enterprises (MSMEs) in the Municipality of
Infanta, Pangasinan. Pangasinan State University. SSRN.
https://doi.org/10.2139/ssrn.4879150

Chen, X., & Guo, F. (2024). Fintech and MSEs Innovation: An Empirical
Analysis. arXiv. https://arxiv.org/abs/2407.17293

Duran, J. C., & Manahan, J. D. (2024). Common challenges of MSMEs in

the Philippines: A case study using PESTLE analysis. Far Eastern
University Manila.

https://www.researchgate.net/publication/
380465119_Common_challenges_of_MSMEs_in_the_Philippines_A_case
_study_using_PESTLE_analysis

Nwosu, K. T., & Umeh, A. L. (2021). Understanding Small Business

Contribution to the National Development in the Philippines. International
Journal of Science and Management Studies (IJSMS), 4, 46–51.
https://doi.org/10.51386/25815946/ijsms-v4i4p105

Ozili, P. K. (2021). Financial inclusion research around the world: A review.

MPRA Paper No. 123587.
https://mpra.ub.uni-muenchen.de/123587/1/MPRA_paper_123587.pdf

29
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Raquiza, M. V. R. (2021). Micro, small, and medium enterprise (MSME)

sector financing. Issues and challenges. University of the Philippines
Center for Integrative and Development Studies. https://cids.up.edu.ph/wp-
content/uploads/2022/02/UP-CIDS-Discussion-Paper-2021-01.pdf

Sharma, A., & Sharma, S. (2024). The Financial Gap in MSME Sector: A
Review of Literature for the Period of 2014 to 2023. Kuey, 79–98.
https://kuey.net/index.php/kuey/article/download/3396/2187/7983

Tadeo, J. B., Mendoza, X. L. D., Tabor Jr, F., Dumagat, S. M., &
Pamintuan, R. Q. (2023). Understanding economic contributions of MSMEs
among Philippine Regions. Journal of Management, Economics, &
Industrial Organization (JOMEINO).

30
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

Survey Questionnaire: Financial Management Practices and Growth of

MSMEs

Instructions: Please answer the following questions honestly. Your

responses will be kept confidential and used solely for academic purposes.
Participation is voluntary.

Section 1: Respondent Profile

1. Name (optional): _________________________

2. Age:

☐ 18–25

☐ 26–35 *6

☐ 36–45

☐ 46–55

☐ 56 and above

3. Gender:

☐ Male

☐ Female

☐ Prefer not to say

4. Business Name: _________________________

5. Type of Business: _________________________

Years in Operation:

☐Less than 1 year

31
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

☐ 1–3 years

☐ 4–6 years

☐ More than 6 years

Section 2: Financial Management Practices

Do you prepare a formal financial plan for your business?

☐ Yes

☐ No

How often do you update your budget?

☐ Monthly

☐ Quarterly

☐ Annually

☐ Never

What methods do you use for financial record-keeping?

☐ Manual (cash books, notebooks)

☐Accounting software

☐ None

Do you separate personal and business finances?

☐Yes

☐ No

How do you monitor your cash flow?

32
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

☐ Regularly with tools/software

☐ Informally / manually

☐ Not at all

Section 3: Challenges in Financial Management

What are the main challenges you face in financial planning and
budgeting? (Select all that apply)

☐ Lack of financial knowledge

☐ Limited time/resources

☐ Lack of access to financial tools/software

☐ Difficulty accessing credit/loans

☐ Other (please specify): __________

Have you experienced difficulty obtaining formal financing?

☐ Yes

☐ No

If yes, what are the main barriers? (Select all that apply)

☐ Lack of collateral

☐ Poor credit history

☐ Complex loan requirements

☐ Lack of financial documents

☐ High interest rates from informal lenders

Do you rely on manual financial management?

33
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

☐ Yes

☐ No

How does this affect your business operations? (Open-ended)

Section 4: Strategies and Support

What financial management strategies have you applied to support

growth? (Open-ended)

What kind of support or training would help improve your financial

management?

☐ Financial literacy training

☐ Access to affordable credit

☐ Use of accounting software

☐ Advisory services

☐ Others: __________

Are you interested in adopting new financial technologies if training is

provided?

☐ Yes

☐ No

Section 5: Impact on Growth

How do you think financial management practices affect your business

growth?

34
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

☐ Very positively

☐ Positively

☐ Neutral

☐ Negatively

☐ Very negatively

Have you seen growth in your business after improving financial

management?

☐ Yes

☐ No

What financial management areas need improvement to enhance growth?

(Open-ended)

35
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

36
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

37
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

38
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

39
 ROMBLON STATE UNIVERSITY

College of Business and Accountancy

40