This case study discusses research aspects relating to a Real Options
model that values the strategies to lend or to idle a loan portfolio in
a chaotic system. Here, discussion focuses on associating events with
changes in data, and advocates the basis of data interpretations upon
practices and events in the real world. The study examined data from
annual reports for actively traded Philippine Universal Banks during an
eight-year window of observation, from 2008 to 2015. A Real Options
model was developed and forwarded to examine the lending behavior of
these formal lending institutions as affected by income inflows,
contingent claims, time, volatility, growth rates, a discount rate, and
information asymmetry. This study expressed that actively traded
Philippine Universal Banks should create more micro lending and risk
mitigation facilities to encourage a more inclusive banking system.