Abstract
Over the past decade, Cambodia’s economic growth rates exceeded expectations, contributing to economic well-being for the majority of the population and new status as a lower middle-income country. This chapter begins with a few highlights, issues, and questions that identify some of the major characteristics and accomplishments of Cambodia’s financial market system over the past decade. Each of these topics will be discussed in more detail later in this chapter.
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- 1.
See Chap. 2 for a discussion of growth with equity.
- 2.
The Center for Financial Inclusion defines financial literacy as: “The combination of knowledge, skills, attitudes and ultimately behaviors that translate into sound financial decisions and appropriate use of financial services” (CFI).
- 3.
The “Let’s Talk Money!” initiative is discussed in more detail in the section in this chapter on the supporting functions.
- 4.
The article suggests “cautious exuberance” will be the predominant sentiment in the market at this time, as there is potential for growth, but reason for caution regarding over-indebtedness.
- 5.
The visual depiction of the financial market system was originally created by Springfield Centre (www.springfieldcentre.com). It was later used to illustrate the financial market system in the Consultative Group to Assist the Poor (CGAP) Funder Guidelines. CGAP. 2015. A Market Systems Approach to Financial Inclusion: Guidelines for Funders. Consensus Guidelines. Washington, D.C. CGAP: Creative Commons License Attribution CC BY 3.0. CGAP is a global partnership of 34 leading organizations that seek to advance financial inclusion. CGAP develops innovative solutions through practical research and active engagement with financial service providers, policy makers, and funders to enable approaches at scale. The World Bank hosts CGAP.
- 6.
The diagram shows only a representative sample of the many organizations that perform functions in the overall financial market system in Cambodia.
- 7.
The “Brief Tour” of supporting functions and rules and norms is followed in this chapter by a more detailed presentation of the core market, rules and norms , and supporting functions.
- 8.
The origin, design, and implementation of Financial Trusts in Cambodia are discussed in more detail in Chap. 6.
- 9.
Chapter 6 shows an example of how one financial service provider can have a big effect on changing accepted norms of corruption and bribery for the benefit of customers and the broader system.
- 10.
The topic of the significant growth of unlicensed and unregulated FSPs is taken up in Chap. 4.
- 11.
See Chap. 5 for more details on ACLEDA Bank Plc. developments.
- 12.
The Findex survey uses an equivalent definition of formally regulated financial institutions, as does the later FinScope survey (2015–2016). The Findex survey drops the definition of adult to 15 years and older, between Findex Surveys 2011–2012 and 2013–2014, while the FinScope survey defines adults as 18 years and older which is a smaller cohort of the population and also one that is more likely to own or use an account at a formal banking institution than 15- to 17-year-olds, who represent a larger percentage of the population.
- 13.
See Chap. 2.
- 14.
The banking sector includes MDIs and MFIs, as well as financial leasing companies and specialized banks.
- 15.
Note; Sathapana Bank figures are included in NBC reports in the banking sub-sector instead of the microfinance sub-sector from the year 2016 onward.
- 16.
Rates cited are for 2016, prior to the announcement of the government’s new pricing policy on microfinance, as of April 2017. This is discussed in the next chapter.
- 17.
QR codes, or quick response codes, were first developed in Japan. They are square barcodes and serve as a way to store information in a digital readable optical label.
- 18.
The dynamics of over-indebtedness in the market and increasing loan sizes in MFIs and MDIs are treated in detail in Chap. 4.
- 19.
A declining balance method calculates interest on the principal outstanding at each payment period; a flat rate continues to calculate interest on the original amount of the loan, even though some of the principal has been repaid. The former is more transparent and is widely used in regulated lending markets. The flat rate is used widely in informal lending markets.
- 20.
- 21.
According to the NBC reports, as Cambodia is a highly dollarized economy, the NBC is unable to use the interest rate channel to conduct its monetary policy. The interest rates of deposit and credit have been determined by the market mechanism. Figure 3.10 shows a dramatic dip in both KHR and USD. The dip in 2012 and rebound of the average industry lending rate in KHR follow the dip in the USD rate. The NBC notes the decline resulted from the impact that Cambodia experienced due to regional currency depreciation compared to the US dollar, which also diminished the value of the riel.
- 22.
See discussion of this topic earlier in this chapter in the section “The Vital Statistics About Market Expansion.”
- 23.
Chapter 4 includes a more in-depth discussion of interest rates over time and the effects on the market for loans and savings centered on the interest rate cap on MFI loans as of April 2017.
- 24.
Author interview 2005.
- 25.
The Prakas on Licensing of Specialized Banks and the Prakas on Registration and Licensing of Microfinance Institutions anticipated three institutional categories: specialized banks, licensed microfinance institutions, and registered microfinance operations. Royal Government of Cambodia (2000) Prakas No B 7-00-06 dated 11 January and “On the Licensing of Micro-Finance Institutions.” Royal Government of Cambodia (2002) Prakas No. 7.02-49 dated 25 February. On Registration and Licensing of Microfinance Institutions.
- 26.
Author interview. 2016.
- 27.
The interest rate cap on microcredit is discussed in depth in Chap. 4.
- 28.
Davel, Gabriel. 2013. Regulatory Options to Curb Debt Stress. CGAP Focus Note 83. Gabriel Davel is the former CEO of the Republic of South Africa Central Bank. South Africa experienced systemic consumer debt crises in the late 1990s and circa 2005.
- 29.
The topic of proliferation of small credit providers is discussed further in Chap. 4.
- 30.
The Smart Campaign: https://www.smartcampaign.org
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Clark, H.A. (2020). Cambodia’s Financial Market System (2004–2019): History, Structure, and Performance. In: Beyond Borders, Beyond Banking. Springer, Singapore. https://doi.org/10.1007/978-981-15-1687-0_3
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