Cambodia’s Financial Market System: Inclusive Dynamics, Impending Crisis?
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What type of exuberance defines the Cambodian financial market system? Is it rational? The past 20 years tell a compelling story of inclusive growth in the financial market system in Cambodia. Growth was enabled by policy foresight and the crowding-in of more players in the core market as well as in the support functions of the market. Label this: Exuberance based on rational behavior. This chapter discuses five factors that effect the level of exuberance in the market: proliferation of small credit providers, borrowers’ capacity to absorb more debt, interest rate caps fuel excessive borrowing, mergers and acquisitions in the microfinance market, and taxation targets.
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