Microfinance and Household Welfare : Cambodia Policy Note
Cambodia's openness to trade and financial flows has fueled one of the fastest credit growth episodes in Asia.A remarkable expansion in formal microfinance lenders contributed to increased access to credit. Since the promulgation of the Nation...
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| Format: | Policy Note |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/144661552916327946/Microfinance-and-household-welfare-Cambodia-policy-note http://hdl.handle.net/10986/31418 |
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okr-10986-314182021-09-16T12:53:53Z Microfinance and Household Welfare : Cambodia Policy Note Pimhidzai, Obert Tong, Kimsun Anantavrasilpa, Ratchada Popovic, Andrej Mel, Sokim Sanchez Martin, Miguel Eduardo MICROFINANCE HOUSEHOLD WELFARE ACCESS TO FINANCE COST OF CREDIT CONSUMER PROTECTION SMALL AND MEDIUM ENTERPRISES SME FINANCE MOBILE BANKING Cambodia's openness to trade and financial flows has fueled one of the fastest credit growth episodes in Asia.A remarkable expansion in formal microfinance lenders contributed to increased access to credit. Since the promulgation of the National Strategy for Microfinance in 2007, Cambodia’s microfinance sector has expanded rapidly, with both assets and credit growing at annualized rates of over 40 percent. While access to credit has helped ease financial constraints for households, one key concern is how the cost of credit and increased exposure to risk might affect household welfare. At the household level, low financial literacy could result in poor borrowing decisions and heighten risks. There are concerns that households may be over-borrowing and increasing their exposure to risks, as there are signs that the market is already highly saturated, given estimated absorption capacity at this level of development. This policy note assesses the impact of access to credit on household welfare in Cambodia and providesevidence on the drivers of the cost of credit in the microfinances sector. To fill the existing knowledge gaps, this policy note uses the latest available data from official sources to provide evidence on (i) the impact of microcredit on household welfare, (ii) profitability and cost of credit in the microfinance sector, and (iii) the effects of the interest rate cap in the sector. This note ultimately presents a series of policy options aimed at facilitating affordability and reducing the cost of credit, while maintaining sector profitability and minimizing risks (both for households and the financial system). The policy options have been developed in consultation with sector stakeholders. 2019-03-18T19:24:58Z 2019-03-18T19:24:58Z 2019-02-28 Policy Note http://documents.worldbank.org/curated/en/144661552916327946/Microfinance-and-household-welfare-Cambodia-policy-note http://hdl.handle.net/10986/31418 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work Economic & Sector Work :: Policy Note East Asia and Pacific Cambodia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
MICROFINANCE HOUSEHOLD WELFARE ACCESS TO FINANCE COST OF CREDIT CONSUMER PROTECTION SMALL AND MEDIUM ENTERPRISES SME FINANCE MOBILE BANKING |
| spellingShingle |
MICROFINANCE HOUSEHOLD WELFARE ACCESS TO FINANCE COST OF CREDIT CONSUMER PROTECTION SMALL AND MEDIUM ENTERPRISES SME FINANCE MOBILE BANKING Pimhidzai, Obert Tong, Kimsun Anantavrasilpa, Ratchada Popovic, Andrej Mel, Sokim Sanchez Martin, Miguel Eduardo Microfinance and Household Welfare : Cambodia Policy Note |
| geographic_facet |
East Asia and Pacific Cambodia |
| description |
Cambodia's openness to trade and
financial flows has fueled one of the fastest credit growth
episodes in Asia.A remarkable expansion in formal
microfinance lenders contributed to increased access to
credit. Since the promulgation of the National Strategy for
Microfinance in 2007, Cambodia’s microfinance sector has
expanded rapidly, with both assets and credit growing at
annualized rates of over 40 percent. While access to credit
has helped ease financial constraints for households, one
key concern is how the cost of credit and increased exposure
to risk might affect household welfare. At the household
level, low financial literacy could result in poor borrowing
decisions and heighten risks. There are concerns that
households may be over-borrowing and increasing their
exposure to risks, as there are signs that the market is
already highly saturated, given estimated absorption
capacity at this level of development. This policy note
assesses the impact of access to credit on household welfare
in Cambodia and providesevidence on the drivers of the cost
of credit in the microfinances sector. To fill the existing
knowledge gaps, this policy note uses the latest available
data from official sources to provide evidence on (i) the
impact of microcredit on household welfare, (ii)
profitability and cost of credit in the microfinance sector,
and (iii) the effects of the interest rate cap in the
sector. This note ultimately presents a series of policy
options aimed at facilitating affordability and reducing the
cost of credit, while maintaining sector profitability and
minimizing risks (both for households and the financial
system). The policy options have been developed in
consultation with sector stakeholders. |
| format |
Policy Note |
| author |
Pimhidzai, Obert Tong, Kimsun Anantavrasilpa, Ratchada Popovic, Andrej Mel, Sokim Sanchez Martin, Miguel Eduardo |
| author_facet |
Pimhidzai, Obert Tong, Kimsun Anantavrasilpa, Ratchada Popovic, Andrej Mel, Sokim Sanchez Martin, Miguel Eduardo |
| author_sort |
Pimhidzai, Obert |
| title |
Microfinance and Household Welfare : Cambodia Policy Note |
| title_short |
Microfinance and Household Welfare : Cambodia Policy Note |
| title_full |
Microfinance and Household Welfare : Cambodia Policy Note |
| title_fullStr |
Microfinance and Household Welfare : Cambodia Policy Note |
| title_full_unstemmed |
Microfinance and Household Welfare : Cambodia Policy Note |
| title_sort |
microfinance and household welfare : cambodia policy note |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/144661552916327946/Microfinance-and-household-welfare-Cambodia-policy-note http://hdl.handle.net/10986/31418 |
| _version_ |
1764474285265518592 |