PHNOM PENH (Cambodia Herald) – Cambodians are among the world's most unbanked people and are also among the most reliant on private informal lenders, according to a World Bank survey released Thursday.
The 2011 survey of about 150,000 people in 148 countries found that more than 75 percent of adults earning less than $2 a day did not use a formal financial institution.
"In several economies around the world -- including Cambodia, the Democratic Republic of Congo, Guinea, the Kyrgyz Republic, Turkmenistan and the Republic of Yemen -- more than 95 percent of adults do not have an account at a formal financial institution," a report on the survey said.
"In all regions, the survey found that only about five percent or fewer adults had reported borrowing from a private informal lender in the previous 12 months.
"But a few economies are exceptions to regional patterns," the report said. "More than 10 percent of adults in Cambodia, the Dominican Republic, Liberia and the Syrian Arab Republic report having taken out a loan from a private informal lender in the past 12 months. Social norms have a large effect on the degree to which this type of borrowing is reported."
The survey also found that in developing countries, emergency or health purposes were the most common reason for having an outstanding loan. "This is especially so in Cambodia, Guinea, Madagascar, Sudan and the Republic of Yemen where more than 30 percent of adults report having an outstanding loan for such purposes," the report said.
Other reasons for borrowing were school fees, building or buying a home and paying for funerals or weddings.
The World Bank said the information on Cambodia came from 1,000 interviews conducted in April and May last year.
Overall, the bank said the survey showed that "those without access to formal banking often have to rely on money lenders who often charge high fees. The 'unbanked' are also less likely to start their own business or insure themselves against unexpected events."
"Financial inclusion, or being 'banked' can be transformative, as it allows poor people to build a more secure future. The ability to save and borrow allows them to build their assets, start a business, invest in education, establish a credit rating, and eventually own a home."
The 2011 survey of about 150,000 people in 148 countries found that more than 75 percent of adults earning less than $2 a day did not use a formal financial institution.
"In several economies around the world -- including Cambodia, the Democratic Republic of Congo, Guinea, the Kyrgyz Republic, Turkmenistan and the Republic of Yemen -- more than 95 percent of adults do not have an account at a formal financial institution," a report on the survey said.
"In all regions, the survey found that only about five percent or fewer adults had reported borrowing from a private informal lender in the previous 12 months.
"But a few economies are exceptions to regional patterns," the report said. "More than 10 percent of adults in Cambodia, the Dominican Republic, Liberia and the Syrian Arab Republic report having taken out a loan from a private informal lender in the past 12 months. Social norms have a large effect on the degree to which this type of borrowing is reported."
The survey also found that in developing countries, emergency or health purposes were the most common reason for having an outstanding loan. "This is especially so in Cambodia, Guinea, Madagascar, Sudan and the Republic of Yemen where more than 30 percent of adults report having an outstanding loan for such purposes," the report said.
Other reasons for borrowing were school fees, building or buying a home and paying for funerals or weddings.
The World Bank said the information on Cambodia came from 1,000 interviews conducted in April and May last year.
Overall, the bank said the survey showed that "those without access to formal banking often have to rely on money lenders who often charge high fees. The 'unbanked' are also less likely to start their own business or insure themselves against unexpected events."
"Financial inclusion, or being 'banked' can be transformative, as it allows poor people to build a more secure future. The ability to save and borrow allows them to build their assets, start a business, invest in education, establish a credit rating, and eventually own a home."
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