Credit as Coping: Rethinking Microcredit in the Cambodian Context

Revisiting Microcredit's Poverty‐Reducing Promise: Evidence from Cambodia

“…They are nevertheless consistent with the studies that found the unfavourable socio-economic effects of MFI microcredit (e.g. Adams & Von Pischke, 1992;Morduch, 1998;Coleman, 1999;Garikipati, 2008;Liv, 2013;Renzenbrink, 2013;Song, 2013;Ovesen & Trankell, 2014;Bylander, 2015;Seng, 2017a), revealing the MFIs' drift away from their original social mission to fight poverty, in Cambodia in particular. These results confirm Seng's (2017a) important findings that microcredit 'has at best no effect on household welfare, and may have an adverse effect', demonstrating cracks in its povertyalleviating promise.…”

“…According to some studies (e.g. Coleman, 1999;Liv, 2012;Pytkowska & Spannuth, 2012;Schicks, 2013;Renzenbrink, 2013;Song, 2013;Ovesen & Trankell, 2014;Bylander, 2015;Seng, 2017a;Bateman, 2017b), the adverse effects are likely attributed to the borrowers' over-indebtedness. The latter is more likely caused by the high lending interest rates and the use of microloans for non-productive purposes such as consumption spending and existing debt repayment (Seng, 2017a).…”

“…Over the past two decades, Cambodia's microfinance sector has developed rapidly, playing a central role in the economy from 1997 to 2011 (Bylander, ). The government attributed the achievement of socio‐economic development and poverty alleviation partly to the sector's growth.…”

“…The sector developed in the early 1990s from non‐profit microloan projects backed by international donors and non‐governmental organisations (NGOs) for the purpose of providing employment for demobilised soldiers and filling the non‐existent banking sector (Seng, ). It has grown over time into more profitable models, notably since 2000, the year when there were five leading MFIs offering an average microloan of approximately US$ 137 to approximately 175 051 borrowers (Bylander, ) and has nearly doubled in size 5 years later (Seng, ). There were 14 MFIs in 2005, 39 MFIs and 6 NGOs in 2014, providing microloans to approximately 1.4 million households (Cambodian Microfinance Association [CMA], ).…”

From rice fields to financial assets: Valuing land for microfinance in Cambodia

“…There is evidence to suggest that household debt to microfinance institutions has contributed to these agrarian changes in Cambodia (Mahanty & Milne, ; Ovesen et al., ). In particular, household debts have outpaced agricultural income: average microfinance loan sizes are now nearly three times larger than per capita income (Bylander, ). The majority of microfinance loans are instead repaid with wages, many of which are remitted from migrant family members (Bylander, ; Diepart & Sem, ).…”