2020 Fiscal Year Research-status Report
Research on the Factors Driving Financial Over-Indebtedness and the Impacts of the Interest Rate Ceiling on the Microfinance Sector: The Cambodian Case and International Comparison Analysis
| Project/Area Number |
18K01604
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| Research Institution | Saitama University |
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Principal Investigator |
サムレト ソワンルン 埼玉大学, 人文社会科学研究科, 准教授 (90614371)
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| Project Period (FY) |
2018-04-01 – 2022-03-31
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| Keywords | Interest rate ceiling / Microfinance / Credit rationing / Debt burden / Cambodia |
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| Outline of Annual Research Achievements |
During FY2020, in collaboration with the JICA Ogata Research Institute, the overall effects of the imposition of the interest rate ceiling on Cambodia's microfinance sector are examined using data from the FY2019 household survey and relevant institutions.
Our borrower-side (i.e., household side) analyses indicate that (1) the average effective interest rate of loans from microfinance institutions (MFIs) declined after the imposition of the interest rate ceiling; (2) relatively low-income borrowers faced a higher probability of being rejected for loans, reflecting the possibility of credit rationing among them; (3) the debt burden occurring among relatively small borrowers possibly increased; and (4) financial literacy played an important role in reducing the household debt burden. Our lender-side (i.e., MFI side) examinations revealed that (1) the average loan size, especially relatively small loans, increased after the ceiling imposition; (2) the interest rate ceiling policy had a negative consequence on the outreach of MFIs, especially non-deposit-taking ones; and (3) the imposition of the interest rate ceiling had an indirect impact on the interest rates of commercial bank loans, reflecting the competition between them and MFIs.
The research findings were presented online at various seminars and at a meeting of the interest rate ceiling committee organized by the National Bank of Cambodia, the Cambodia Microfinance Association, and the JICA Ogata Research Institution. Furthermore, research papers based on this research outcome were also published.
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| Current Status of Research Progress |
Current Status of Research Progress
1: Research has progressed more than it was originally planned.
Reason
The research plan for FY2020 includes the examination of the overall effects of the interest rate ceiling on borrowers' situation and lenders' behavior, using the data from both the household and microfinance institution sides. As described in "Summary of Research Achievements," this was sufficiently accomplished.
Furthermore, the research outcome was presented online for the interest rate ceiling inter-ministerial committee in Cambodia despite the COVID-19 pandemic.
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| Strategy for Future Research Activity |
During FY2021, the research plan includes a survey of studies on other countries that have also imposed an interest rate ceiling for loans. An international comparison study will be conducted. This will help enrich our insights into the impacts of the ceiling imposition. If the COVID-19 situation improves and travel is safely possible, further field research trips, and conference participation are planned to disseminate the research results. Research collaboration with relevant institutions and researchers is also in the planned activities.
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| Causes of Carryover |
In FY2020, due to COVID-19 pandemic, various related research conferences were cancelled, and overseas research trips were not possible. Consequently, travel costs were saved. As described in "Plans for the Research Scheme," during FY2021, if the COVID-19 situation improves and travel is safely possible, further field research trips, conference participation, and perhaps seminar organization are planned to disseminate the research results. The amount incurred from FY2020 will be used to partially cover the costs for these activities.
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