Manila (28 October) -- Strict and overly-cautious banks in the Philippines have been cited for saving the country from being drawn deeply into the current global financial crisis.

"For all you know, this country may not even be hit hard by this global financial turmoil," says financial adviser Myrna Valdez who runs her own MPV Asset Management Company, a financial consulting firm in the southern city of Davao.

Valdez said most Philippine banks have "very tight credit policies" that turn off many Filipino businessmen unlike in the United States where credit is easy to get with hardly any collateral.

"It's much more difficult to get bank loans here. Philippine banks have this pawnshop mentality and don't want to lend you money unless you meet their requirements which include so much collateral," says Valdez who also sits as corporate financial officer of the Davao City Chamber of Commerce and Industry.

The noted financial adviser agrees with the recent views of US-based rating agency Standard and Poor's which stated that the Philippines is an "island of calm" in Asia amidst the ongoing financial turmoil in the higher-rated and supposedly more stable countries like Malaysia, Thailand, India, and Korea.

"The Philippines won't be as badly hit by this global financial crisis which is crippling such powerful countries like the US, Europe and Japan. The panic that you also see in our own country is just a farce--there's no need to panic because our country's economic fundamentals remain strong as ever," Valdez said.

Philippine bank's "inherent distrust" of borrowers, strict lending guidelines and other banking reforms have placed the country in a much stronger financial position to withstand another worldwide financial crisis after going thru the devastating and crippling 1997 Asian financial crisis, according to Valdez.

The financial consultant explained that the financial turmoil started in the US when banks owning a lot of long-term assets, like subprime home mortgages, took short-term debts which they tried to pay off with short-term loans borrowed from other banks. Nervous bankers, out of fear, stop extending short-term credit and hoarded their capital, shutting out the flow of cash in the system which caused a lot of bank failures in the US.

"A country's economy cannot function if people can't get credit easily. This is what's happening and it has a domino effect on the global economy," Valdez said.

Trade Undersecretary Merly Cruz, however, cited government banks and financial institutions for their prudent banking policies that helped the country weather the worldwide financial turmoil and boost the steady growth of the Philippine economy in recent years.

"We're confident our country will weather this global crisis. Right now, this country stands on a better and stronger economic position because our banks made all the needed adjustments and banking reforms since the 1997 Asian financial crisis.