Abstract

This study investigates the impact of social capital and formal governance within agrarian reform cooperatives on member participation and loan repayment under the Agrarian Production Credit Program (APCP) in Nueva Ecija, Philippines. Utilizing data from sixteen cooperatives and 275 farmers, the research applied correlation and ordinary least squares (OLS) regression analysis to examine the relationships between variables. Social capital was evaluated based on external, relational, and cognitive dimensions, while formal governance was assessed through decision-making, ownership, and income distribution metrics. The findings revealed that strong social capital and effective governance significantly enhance member involvement in cooperative seminars and activities. However, these factors did not show a significant correlation with loan repayment rates, except for share capital, where a 1% increase in a member’s share capital was associated with a 6% increase in the likelihood of loan repayment. Additionally, interviews with cooperative officials provided insights into the cooperatives’ institutional arrangements and organizational formations, highlighting differences influenced by economic, social, historical, and geographical factors. The study suggests that improved operationalization of social capital and formal governance could enhance empirical findings and recommends policy support for cooperative development to facilitate farmers’ access to formal credit.