ABSTRACT
This chapter reviews the impact of microfinance on household well-being in Cambodia. Previous studies report that by expanding access to finance for underserved populations, microfinance has been associated with an increase in income, greater agricultural productivity, and poverty reduction. However, other research has identified its undesirable effects, such as over-indebtedness, increased child labor, and land loss. Using data from a survey in Phnom Penh and six provinces in Cambodia, this chapter examines people’s perceptions of microfinance. The results show that while many respondents view it as helpful in starting businesses and improving living standards, a significant number also perceive microfinance as a cause of the increase in the debt burden. This chapter also discusses important challenges in the microfinance sector, including the relatively high interest rates, multiple loan problems, market saturation, and limited financial literacy among borrowers. Finally, the chapter also provides some suggestions for future research leading to a better understanding of the role and effects of microfinance in Cambodia.
