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Over‐indebtedness and microcredit in Cambodia: Moving beyond borrower‐centric frames
Author(s) -
Bylander Maryann,
Res Phasy,
Jacoby Lacey,
Bradley Peter,
Pérez Andrea Blobel
Publication year - 2019
Publication title -
development policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.671
H-Index - 61
eISSN - 1467-7679
pISSN - 0950-6764
DOI - 10.1111/dpr.12399
Subject(s) - microfinance , debt , financial system , loan , financial literacy , collateral , boom , business , economics , monetary economics , finance , economic growth , environmental engineering , engineering
Abstract Over the past two decades, Cambodia has experienced an unprecedented credit boom, a growth in lending so rapid that the International Monetary Fund ( IMF ) referred to it as “one of the fastest financial deepening episodes by historical cross‐cultural standards” ( IMF , 2016, p. 4). This deepening has been driven by the expansion of microcredit. In tandem, over‐indebtedness has increased among microcredit borrowers, and debt has become a significant political and economic concern. This article explores how over‐indebtedness is understood and explained by stakeholders across microcredit value chains. To do so, we draw on interviews with microfinance institution ( MFI ) executives, investors, branch managers, partners, financial literacy trainers, loan officers and borrowers in Siem Reap and Phnom Penh. We find that across the sector, dominant framings of over‐indebtedness privilege borrower‐centric explanations, while discounting the structural drivers of excessive lending and borrowing. As a consequence, current efforts to limit over‐indebtedness are unlikely to produce the kinds of solutions that are most needed to reduce the debt stress among borrowers. These arguments have implications across the Global South, particularly for contexts where microfinance is rapidly expanding.