ABSTRACT
Over the past two decades microfinance has become firmly entrenched as a development solution throughout the global South, offering broad promises of poverty reduction, empowerment, rural development, and livelihood generation through access to financial services. While the sector initially focused on the extension of microcredit —small loans targeting the rural poor-the microfinance sector is now comprised of a diverse set of actors, practices, and financial products. Few countries have incorporated microfinance so rapidly into their development strategies as Cambodia. In the early 1990s, rural Cambodia had a minimally functioning cash economy and nearly non-existent formal banking services. Only two decades later, by the end of 2013, there was roughly one active microfinance borrower for every two Cambodian households. 1
Globally, microfinance institutions (MFIs) offer a range of financial services; however, in Cambodia, MFIs are centrally organized around the provision of microcredit, which is the focus of this chapter. 2 MFIs offering relatively low-cost credit can be found in the most remote areas of the country, and have had striking success at “banking” the rural poor. In 2012, an estimated 46 percent of working-age adults below the national poverty line had a loan from a microfinance institution (Krauss et al . 2012), indicating the extent to which formal credit is a normative part of the contemporary social and economic landscape of the poor. Indeed microfinance experts suggest that Cambodia is among the top countries in the world in terms of microcredit penetration (Gonzalez 2010; Krauss et al . 2012; Planet Rating 2013).
