No.34 Perceptions of Microfinance: Evidence from a Household Survey in Cambodia

This study examines how people perceive microfinance in Cambodia. Using data and information from a household survey conducted in 2021, it identifies factors influencing perceptions of microfinance, including interest rates, impact on debt burdens, and its role in business support and improving living standards. The findings show that individuals with higher financial literacy and stronger social capital are more likely to understand the relatively high interest rates charged by microfinance institutions, while self-employed individuals often consider these rates less reasonable. Although many individuals perceive microfinance as helpful for starting businesses and improving their living standards, there are concerns about the rising debt burden due to microfinance, especially among those with higher financial literacy, higher social capital, and multiple loans. These results imply the importance of improving financial education, building stronger community networks, and creating accessible counseling services to help borrowers better manage their debt. These measures are essential to ensure that microfinance has a positive impact on people’s lives and contributes to socio-economic development in Cambodia.


Keywords: Perceptions, Social capital, Financial literacy, Microfinance