Financial Literacy and Consumer Protection in the Cambodian Microfinance Sector

Abstract

This chapter explores the roles of financial literacy and consumer protection in the microfinance sector in Cambodia. Using data from a household survey conducted in Phnom Penh and six provinces in Cambodia in 2021, the chapter examines the determinants and the importance of financial literacy for households in the survey, including microfinance borrowers. The results reveal limited financial literacy among many respondents, whose households are more likely to rely on informal credits. This can increase their vulnerability to over-indebtedness. The chapter also presents initiatives and efforts aimed at enhancing customer protection in Cambodia, including those undertaken by the Cambodian government, the National Bank of Cambodia, the Cambodia Microfinance Association, the Association of Banks in Cambodia, and other national and international organizations. To promote sound financial inclusion and sustainability of the microfinance sector in Cambodia, it is important to strengthen financial literacy among borrowers and the public, enforce consumer protection measures effectively, and promote responsible and ethical lending practices.