Financial Literacy and Loan Repayment Behavior Among Philippine Uniformed Personnel: Inputs for a Responsible Financing Policy Framework

Abstract

This study examined the influence of financial literacy on loan repayment behavior among Philippine uniformed personnel as a basis for a responsible financing policy framework. A descriptive-correlational design was used among 391 personnel with active loan obligations from the Philippine National Police, Armed Forces of the Philippines, Bureau of Fire Protection, and Bureau of Jail Management and Penology. Respondents were selected through stratified sampling, and data were gathered using a validated 27-item questionnaire. The instrument obtained an overall Scale-Level Content Validity Index of 1.00 and reported Cronbach's alpha and McDonald's omega coefficients of .78. Descriptive statistics, Welch analysis of variance, standard analysis of variance, Spearman's rho correlation, multiple regression, and moderation analysis were applied. Financial literacy was manifested at a moderate level, with a recalculated overall mean of 3.02. Awareness of financial rights and obligations received the highest dimension mean (M = 3.20), while budgeting and financial planning received the lowest (M = 2.82). Loan repayment behavior was also moderately manifested, with a recalculated overall mean of 3.17. No statistically significant institutional differences were found in financial literacy or repayment behavior. Financial literacy had a statistically significant positive relationship with loan repayment behavior (rho = .346, p < .001). In the multiple-regression model, financial literacy was the only significant predictor of repayment behavior (B = .596, beta = .576, p < .001), while age, rank, and income indicators were not significant. Moderation analysis showed that institutional affiliation changed the strength of the relationship for the AFP and BJMP groups but not for the BFP group. The findings support mandatory financial-capability development, responsible-lending safeguards, advisory services, institution-specific interventions, and systematic monitoring.