Paying the Price: Management Implications of Public Market Vendors’ Debts and Its Effect on the Market Price of Goods in San Juan City Agora Market

Abstract

Microenterprises are significant contributors to economic development and poverty reduction. However, they often struggle with financial capability issues. Market vendors usually resort to informal sources of loans, such as the "5-6" system. The borrowed money comes with extremely high interest rates, which traps market vendors in a cycle of debt dependency and financial strain. Guided primarily by the Cost-Push Inflation Theory, the research focuses on the debt management practices of market vendors and their influence on the pricing of goods at the San Juan City Agora Market. The study utilizes a mixed-methods research design that combines a case study focused on the San Juan City Agora Market with surveys. Structured interviews, observation checklists, and document reviews are used to obtain data, while thematic analysis is employed to interpret it. Results showed a significant relationship between the monthly debt repayment of market vendors for informal loans and their pricing strategies. The active loans that market vendors have, and their willingness to pay high interest rates in order to get money quicker, have a significant influence on the prices they set for the goods they sell, which are often higher than the suggested retail price (SRP). These findings indicate that debt practices, including reliance on informal lenders, such as “5-6,” and agreeing to the usurious interest rates charged by these informal lenders, have a direct impact on how market vendors set prices for the goods they sell, distributing or shifting the burden of paying the usurious interest rates of debts to consumers.