The Underside of Microfinance: Performance Indicators

and Informal Debt in Cambodia

W. Nathan Green , Theavy Chhom, Reach Mony

and Jennifer Estes

ABSTRACT

Microfinance is a dominant strategy used to promote rural development

around the world. Rather than directly track its impact on borrowers, how-
ever, microfinance institutions rely on indicators of financial performance
adopted from commercial banking as proxies for positive social impact. Yet,
as critical research has shown, the industry depends on coercive peer pres-
sure, social shaming and various forms of gendered exploitation to achieve
its high rates of loan repayment. This article maintains that there is a need
to investigate how the microfinance industry’s own indicators of impact con-
tribute to the ways microfinance can harm borrowers. Based on qualitative
research in Cambodia during 2021 and 2022, the article demonstrates how
financial performance indicators, most notably portfolio quality, both hide
and exacerbate the ways that borrowers juggle debt between formal and in-
formal lenders. In making this argument, the article advances critical schol-
arship on microfinance by showing how microfinance repayment structures
debt-juggling practices in ways that put borrowers at greater risk of over-
indebtedness. As a result, the microfinance industry is able to claim that it
successfully helps to alleviate poverty, even as it accumulates profits by ap-
propriating wealth from poor and low-income households across the global
South.

INTRODUCTION

Over the past few decades, microfinance has become a dominant develop-
ment strategy around the world. While the microfinance industry provides a
range of services, its main business is lending credit, purportedly to reduce
poverty, empower women, improve well-being, or a combination of these
goals (Bateman and Maclean, 2017; Bernards, 2022; Kar, 2018; Mader,

The research for this article was funded by a faculty start-up grant (A-0003620-00-00) at the
National University of Singapore (NUS). The authors thank research assistants Rosa Yi and Tan
Jia Yee for their help in collecting secondary source material, as well as Vincent Guermond,
Brendan O’Byrne and members of the Politics, Economies and Space research group at the
NUS Geography Department, who all provided helpful comments on an earlier draft of this
paper. They are also grateful to the journal’s anonymous referees for their feedback.

Development and Change 54(4): 780–803. DOI: 10.1111/dech.12778

© 2023 The Authors. Development and Change published by John Wiley & Sons Ltd on behalf
of International Institute of Social Studies.
This is an open access article under the terms of the Creative Commons Attribution-NonCom-
mercial-NoDerivs License, which permits use and distribution in any medium, provided the
original work is properly cited, the use is non-commercial and no modifications or adaptations
are made.
Performance Indicators and Informal Debt in Cambodia 781

2015). However, in practice, the global microfinance industry no longer

lends credit based on measuring these social impacts. Rather, microfinance
institutions now manage their operations using indicators of financial per-
formance adopted from the commercial banking industry. One of these key
performance indicators is portfolio quality, typically measured by loan re-
payment rates. Controversially, the industry often uses portfolio quality as
a proxy for social impact. It has long argued that a high-quality portfolio
— one in which repayment rates are high — hypothetically reflects borrow-
ers’ capacity to repay their loans through income-generating activities (e.g.
Ledgerwood, 1999; Otero and Rhyne, 1994; Von Pischke, 1991).
Yet critical research on microfinance provides ample reason to contest the
idea that loan repayment indicates a positive social impact. This scholar-
ship has demonstrated that the microfinance industry depends on coercive
peer pressure, social shaming and various forms of gendered exploitation
to achieve its high rates of repayment (Karim, 2011; Schuster, 2014). As a
result, borrowers under duress often pursue harmful coping strategies like
cutting back on food or selling assets to repay their loans (Bateman and
Maclean, 2017). Another stream of research has focused on the complex
ways that households ‘juggle’ their debts to make the regular repayment
deadlines enforced by the microfinance industry (Guérin et al., 2014). These
juggling practices include cross-borrowing and refinancing loans across
both formal and informal markets. While juggling debt can entail creative
forms of borrower agency (Wampfler et al., 2014), it often exposes bor-
rowers to higher risks of over-indebtedness, leading to harmful outcomes
(Bylander, 2015; Dattasharma et al., 2016; Taylor, 2012).
This article maintains that there is a need to investigate how the micro-
finance industry’s own indicators of impact contribute to the ways micro-
finance harms borrowers. Informed by work on the financialization of
poverty, the article focuses on how financial performance indicators, most
notably portfolio quality, actually hide and exacerbate risky debt juggling.
This is because the rise of commercial microfinance has subjected poor and
low-income households to the accumulation imperatives of global financial
markets (Aitken, 2013; Kar, 2018; Mader, 2015; Roy, 2010). The microfin-
ance industry’s strict demand for financial performance has disciplined
borrowers to repay through whatever means possible, thereby benefiting
shareholder profits at the expense of their own well-being. However, little
research to date has examined the ways that financial indicators shape
borrowing practices. This is a problem, because indicators like portfolio
quality exert a powerful influence on credit officers, managers and investors
in the microfinance industry (Afonso et al., 2017; Johnson, 2014; Roy,
2010). Without studying indicators and their effects on both institutional
management and borrowing practices, critical scholars of microfinance
overlook an important mechanism by which borrowers’ everyday lives are
restructured to provide value for global finance.
782 W. Nathan Green et al.

To address this need, we analyse the relationship between debt-juggling

practices and portfolio quality in Cambodia. For the past two decades, Cam-
bodia has pursued a for-profit model of microfinance, largely funded by for-
eign investors. Not only does Cambodia have the greatest number of micro-
finance borrowers per capita in the world, but average loan sizes are now
far larger than per- capita income, with the majority of loans secured by
land-based collateral (MIMOSA, 2020). Moreover, microfinance borrow-
ers in Cambodia are experiencing widespread problems associated with
over-indebtedness, including malnutrition, forced migration, child labour,
debt bondage and land dispossession (Bliss, 2022; Equitable Cambodia and
LICADHO, 2021; Green and Bylander, 2021; Natarajan et al., 2021).1
Drawing on qualitative research with rural households, industry leaders
and national regulators, we argue that microfinance in Cambodia depends on
the risky juggling of informal debt, and that indicators like portfolio quality
not only fail to account for this relationship, but also intensify it. As house-
holds’ microfinance debt grows, they must meet strict repayment schedules
enforced by collateralized loan contracts. Faced with insufficient income
and industry regulations preventing cross-borrowing between formal insti-
tutions, over-indebted households often take out informal loans to meet their
monthly loan repayments or to refinance their existing loans. However, port-
folio quality does not account for those borrowers who repay by juggling
informal debt. Moreover, in a market of stiff competition and strong for-
eign capitalization, microfinance institutions manage their portfolio quality
through aggressive loan collection practices, often encouraging borrowers
to juggle debt.
In making our argument, we advance critical scholarship on microfinance
by showing how microfinance repayment structures debt-juggling practices
in ways that put borrowers at greater risk of over-indebtedness. Specific-
ally, microfinance both produces informal relations of debt, and depends on
them to ensure profitable rates of return. Hardly a feature specific to Cam-
bodia, much of the labour that goes into ‘systemically enfolding’ micro-
finance borrowers into global financial markets is the labour of juggling
debt (Kar, 2018: 17). We therefore suggest that juggling debt is a generaliz-
able characteristic of formal financial markets that generate profit by lending
money to economically precarious households. Yet, by building a global in-
dustry based on financial performance indicators, microfinance is managed
and regulated in ways that do not account for these informal practices. As a
result, this industry claims that it successfully helps to alleviate poverty, even
as it accumulates profits by appropriating wealth from poor and low-income

1. In this article, we use the term microfinance industry primarily to refer to those financial
institutions registered with the Cambodia Microfinance Association (CMA). However, the
industry also includes seven commercial banks which are not all part of the association,
but which nevertheless began as microfinance institutions, and for whom clients accessing
microcredit continue to make up a large portion of their loan portfolios.
Performance Indicators and Informal Debt in Cambodia 783

households across the global South (Bateman, 2010; Bernards, 2022; Green,
2022a; Schuster and Kar, 2021).
In the following section, we begin by examining critical scholarship on
microfinance, juggling debt and the financialization of poverty to highlight
key analytical points for understanding the relationship between portfolio
quality and debt-juggling practices. Next, we describe our methodology. We
then show how the microfinance industry in Cambodia has used portfolio
quality, alongside other performance indicators, as a proxy for social impact,
despite evidence that borrowers are struggling with too much debt. The final
section analyses how households juggle debt between formal and informal
lenders to repay their microfinance loans, often with encouragement from
the microfinance industry itself. We conclude our article with a brief outline
of our empirical, conceptual and policy contributions.

MICROFINANCE, JUGGLING DEBT AND THE FINANCIALIZATION OF

POVERTY

The commercial microfinance industry emerged in the 1990s out of interna-

tional efforts to alleviate poverty through market-based strategies. As part
of a larger neoliberal shift in development practice, international develop-
ment organizations, notably the World Bank Group, claimed that only for-
profit microfinance institutions (MFIs) could deliver innovative and flexible
financial services suitable to poor households’ financial needs, particularly
in remote, rural areas (Ledgerwood, 1999). In what came to be known as
the ‘financial systems approach’ to microfinance, MFIs sought to elimin-
ate their dependency on donor funds or state support by becoming finan-
cially self-sufficient and attractive to private investors (Robinson, 2001: 22).
In doing so, the industry controversially claimed that it could both turn a
profit and help alleviate poverty among the world’s poor and low-income
households.
To achieve this ‘win-win’ solution, advocates for a financial systems ap-
proach to microfinance set about adopting best practices of commercial
banking to improve their institutional management (Morduch, 2000: 617).
These efforts were assisted by a wide range of multilateral and bilateral de-
velopment institutions. Most notably, in 1995 the World Bank established
the Consultative Group to Assist the Poor (CGAP) — a global network
of actors involved in the commercial microfinance industry — to provide
a knowledge hub that could assist donor-dependent MFIs transform into
commercially viable institutions (Roy, 2010: 44). CGAP and others helped
to institutionalize a set of key financial performance indicators that would
be adopted by commercial MFIs around the world (CGAP, 2006; The SEEP
Network, 2005). In its influential report to global investors, for example,
CGAP distilled these indicators into five categories: client outreach, depth of
outreach, financial sustainability, efficiency and portfolio quality. It claimed
784 W. Nathan Green et al.

these indicators were foundational for creating an inclusive financial system

(CGAP, 2006: 41).
Focusing on portfolio quality was seen as paramount for commercializing
microfinance. Monitoring portfolio quality would help MFIs maintain high
levels of loan repayment, vital to paying for operational costs and attract-
ing private investment capital seeking high returns on investment. Portfolio
quality came to be tracked primarily with the metric of portfolio at risk
(PAR), referring to the percentage of loans past due within a portfolio (a
portfolio can belong to an individual credit officer, institution or national
industry). There are, however, other metrics for measuring portfolio quality,
including the loan write-off ratio and annual loan-loss rate, because tracking
PAR alone does not give a complete picture of loan quality (The SEEP Net-
work, 2005: 75). For instance, a financial institution that aggressively writes
off loans will lower their PAR ratio, as these loans are no longer accounted
for on the institution’s books. Nevertheless, PAR remains the most important
and common metric for tracking the indicator of portfolio quality within the
industry. As a technical device for risk management, PAR alerts managers
to geographic areas or sectors in their portfolios that are facing possible de-
fault. This allows them to redirect their resources to either improve loan as-
sessment or concentrate their efforts on debt collection (Mader, 2015: 101).
Moreover, risk assessment metrics like PAR have helped render borrowers
into an asset class legible to global investors, a foundational process of fin-
ancialization, by enabling investors to evaluate credit quality and make in-
vestment comparisons across the global industry (Aitken, 2013: 482). Thus,
‘by the close of the twentieth century, one benchmark had come to domin-
ate the global microfinance industry: portfolio at risk … a financial indicator
borrowed from the very banking industry that microfinance was supposed to
challenge’ (Roy, 2010: 31). For this reason, we use portfolio quality largely
in reference to PAR in this article.2
Crucially for our argument, performance indicators like portfolio quality
also came to be treated as proxies for social impact under the financial sys-
tems approach to microfinance. According to proponents of this approach
in the 1990s, directly evaluating the social impacts of credit, such as in-
come growth, was nearly impossible given the ‘fungibility of money’ and
the complexity of borrowers’ financial lives (Robinson, 2001: 143–44; Von
Pischke, 1991: 54–56). Instead, they recommended that microfinance insti-
tutions should track both client demand for services and their institution’s
financial performance, using indicators like outreach and portfolio qual-
ity. These performance indicators would in turn serve as proxies for posi-
tive impact in the evaluation of a credit programme (Ledgerwood, 1999: 3;
Otero and Rhyne, 1994: 106–09). In other words, it could be assumed that

2. Our interlocutors also primarily used PAR when discussing the quality of their portfolios.
Performance Indicators and Informal Debt in Cambodia 785

borrowers had increased their income (presumably by starting a microenter-

prise) if they repaid their loan and then took on a new, larger loan.
However, since the financial systems approach took over the global micro-
finance industry, critical scholars of microfinance have advanced alternat-
ive explanations for why microfinance repayment rates are so high. This
work has challenged the notion that a high repayment rate is a proxy for
positive social impact, whether that be defined as poverty alleviation, wo-
men’s empowerment or improved well-being. Importantly, in the original
group-lending model made famous by the Grameen Bank in Bangladesh in
the 1980s, repayment is often achieved through social peer pressure, with
borrowers frequently shamed by group members and others in their com-
munities to repay their loans (Karim, 2011; Schuster, 2014). Furthermore,
communal forms of solidarity are often exploited to turn social capital into
financial capital, with borrowers turning to each other to help repay their
loans (Aitken, 2013; Maclean, 2010). Faced with peer pressure, shame and
other forms of coercion, microfinance borrowers around the world — usu-
ally women — have been recorded repaying their loans by pursuing harmful
coping strategies (Bateman and Maclean, 2017).
Alongside this critical work, another strand of research has shown that
microfinance also overlaps, intersects with and depends on prior relations
of informal debt (Dattasharma et al., 2016; Green and Estes, 2019; Guérin
et al., 2014; Harker, 2020; Shakya and Rankin, 2008; Taylor, 2012). To
capture this relationship, Guérin (2014) introduced the concept of ‘juggling
debt’, examining how microfinance borrowers in southern India repaid
their loans by cross-borrowing, reborrowing or refinancing their loans in
strategic ways. These debt-juggling practices sometimes occurred within
the same institution, but would also take place between formal institutions,
informal lenders or both. In a different study, based on a comparison of mi-
crofinance in Nepal and Vietnam, Shakya and Rankin concluded that, ‘Loan
swapping and creative borrowing reveal the extent to which microfinance
programmes rely on the circulation of borrowed money — not a growing
economic base of microenterprises’ (Shakya and Rankin, 2008: 1228). A
central conclusion of this juggling debt scholarship is that informal and
formal relations of debt not only persist together, they also co-produce each
other (Guérin et al., 2014).
Importantly, the outcomes of juggling debt are shaped by the political-
economic and social relations within a financial landscape, as well as a
borrower’s position within this context. On the one hand, borrowers may
strategically juggle debt. Wealthier, more well-connected borrowers might
do it to take advantage of better terms of credit (Wampfler et al., 2014).
More precarious borrowers might take on multiple debts either to diversify
their social relations of support or to reduce the burdens of dependency
shaped by caste, class, kin or gender (Guérin, 2014: S47). In both instances,
juggling debt can be a form of creative agency, resistance or upward
mobility (Harker, 2020; Shakya and Rankin, 2008). On the other hand,
786 W. Nathan Green et al.

juggling debt often reinforces uneven, and exploitative, relations of power,

thus increasing risks of over-indebtedness (Bylander, 2015; Dattasharma
et al., 2016; Guérin et al., 2014; Ovesen and Trankell, 2014). In the context
of India’s neoliberal agrarian political economy, Taylor (2012) found that
juggling debt led to a crisis of indebtedness to the microfinance industry, as
smallholder farmers turned to informal lenders to repay their formal micro-
finance debts when faced with volatile commodity markets and a degraded
environment. Similarly, Green and Estes (2019) found that microfinance
borrowers in Cambodia experienced increased precarity as they borrowed
from informal lenders on top of MFIs to pay for healthcare in a context of
underfunded state welfare services.
In short, it is not the formal versus informal characteristic of debt that
determines whether it is emancipatory or exploitative, but how it fits into
a larger socio-economy (Guérin and Venkatasubramanian, 2020). Given
that the commercial microfinance industry has become a dominant force
in lending, it is necessary to examine how it has structured debt-juggling
practices in ways that exacerbate risks of over-indebtedness. Crucially, as
scholars of the financialization of poverty have shown, microfinance debt
introduces a new imperative to earn profit for investors who are often physic-
ally and socially removed from borrowers (Aitken, 2013; Kar, 2018; Mader,
2015; Roy, 2010). As the everyday lives of poor people are enfolded into
a global financial system through processes of financialization, borrow-
ers are invited to ‘live by finance’ to lift themselves out of poverty (Roy,
2010: 32). The obligation to repay loans on time, monitored by the in-
dustry through indicators like portfolio quality, means that borrowers are
now subject to new forms of financial discipline. This discipline is in turn
enforced at multiple levels to maintain regular financial flows (Mader, 2015:
101). Investors, MFI managers and individual loan officers all have var-
ied incentives and imperatives to promote high repayment rates that ensure
a good quality portfolio (Aitken, 2013; Kar, 2018; Karim, 2011; Maîtrot,
2019).
In the remainder of this article, we combine insights from the scholar-
ship on juggling debt and that on the financialization of poverty in order to
analyse how Cambodian households juggle debt to repay their microfinance
loans. In doing so, we demonstrate how indicators of portfolio quality may
actually heighten risks of over-indebtedness. Before turning to this analysis,
we first describe our research methodology.

METHODOLOGY

Our analysis draws on qualitative research conducted in Cambodia during

2021 and 2022. We worked with diverse actors across multiple scales to
examine the practices of both microfinance industry representatives and
borrowers. To learn about the industry, we conducted 56 interviews with
Performance Indicators and Informal Debt in Cambodia 787

microfinance leaders, state regulators, market consultants and international

investors in the capital city of Phnom Penh. These included interviews
with senior management of 10 out of the 12 largest banks and MFIs
in the country, which together comprise nearly 90 per cent of the na-
tional micro- and small-loan portfolio. To better understand industry reg-
ulations, we interviewed members of the National Bank of Cambodia,
as well as representatives from the Cambodia Microfinance Association
(CMA), the Association of Banks in Cambodia, and other industry con-
sultants. We conducted interviews with 16 bank and MFI branch staff, 18
informal lenders, and 11 local authorities in the north-western province of
Battambang.
To investigate borrowers’ practices, we conducted a total of 52 interviews
with rural households located in two villages in Battambang Province: Baku
and Sala.3 The village of Baku has a population of 536 households. It is
located along a national highway, 15 km from the provincial capital. Rice
farming is the predominant livelihood activity, alongside raising livestock,
small business and non-farm work. Young people engage in seasonal migra-
tion and daily wage labour, sometimes remitting money home. The village
of Sala is smaller, comprising 345 households. It is also more remote than
Baku as it is located 25 km from the provincial capital and several kilo-
metres from a national highway. Due to its location, rice agriculture is a
more important part of household livelihoods than in Baku. However, many
households also rely on remittances from youth who have migrated to Thai-
land in recent years.
The primary goal of our village-based research was to investigate the
complexity of debt-juggling practices. We therefore designed this part of our
project based on a case-study logic, which prioritizes qualitative informa-
tion about processes and social relations (Small, 2009). While a large-scale
livelihood survey may have been able to provide representational data about
the national microfinance industry, this was not an appropriate method for
answering our research questions about juggling debt. Nevertheless, given
that microfinance is now available in diverse locations across the country,
including urban contexts, we compare our findings to the growing number
of national studies on over-indebtedness in Cambodia to situate our research
in relation to the larger national context. To select participants, we used pur-
poseful sampling to interview farm households of different socio-economic
levels. We spoke primarily with women, as they tend to be responsible for
managing daily finances in Cambodia. The interviews we completed in Bat-
tambang Province were conducted in Khmer and later transcribed into Eng-
lish for analysis; those completed in Phnom Penh were conducted in English.
We have anonymized all interviews to maintain confidentiality.

3. These village names are pseudonyms.

788 W. Nathan Green et al.

CAMBODIAN MICROFINANCE AND PORTFOLIO QUALITY

Microfinance has become a pillar of the Cambodian government’s rural de-

velopment strategy. Over the past three decades, the microfinance industry
has expanded rapidly, exceeding global trends (MIMOSA, 2016). In the
early 1990s, the industry consisted of donor-funded NGOs that disbursed
credit to microenterprises through group-lending methods. By the end of
the decade, however, microfinance NGOs began to transform into com-
mercial institutions with the assistance of Western development partners.
The Cambodian government adopted a light-handed regulatory approach to
foster a policy environment amenable to foreign investors eager to invest
within the new commercial industry (Bevacqua, 2017). Commercialization
proceeded rapidly throughout the 2000s. As a result, MFIs switched from
group lending to providing larger, individual loans secured with newly is-
sued land titles. Attracted by fast growth rates and profitable returns, re-
gional banks from East Asia have recently acquired majority shares in Cam-
bodia’s largest MFIs. Within the industry, there are now seven commercial
banks with small-loan portfolios, five deposit-taking MFIs, 79 smaller MFIs
and 234 rural credit institutions (NBC, 2021).
The industry currently provides ‘micro’ and ‘small’ loans at the highest
per capita rate of any microfinance industry in the world (MIMOSA, 2020).
According to the CMA, the industry had 3.06 million active microloans in
2022 in a country with only 3.6 million households.4 Most borrowers are
in rural areas, although households regularly have close ties to urban areas
due to out-migration and remittance flows (Green and Estes, 2022). The in-
dustry’s total micro- and small-loan portfolio grew from US$ 98 million in
2004 to more than US$ 16.4 billion in 2022, equivalent to more than 60 per
cent of the country’s gross domestic product (Green and Bylander, 2021).
During this time, the average loan size far outpaced per capita income — in
2021 the average loan was larger than 95 per cent of all incomes in the coun-
try (Equitable Cambodia and LICADHO, 2021). Due to this rapid credit ex-
pansion, the International Monetary Fund (IMF) claims that Cambodia has
experienced ‘one of the fastest financial deepening episodes by historical
cross-country standards’ in the world (IMF, 2016: 4).
Today, credit officers from all the large banks and MFIs, as well as many
smaller ones, serve both Baku and Sala villages. These formal lenders con-
tinue to focus on agriculture loans, since Battambang Province is one of
the most productive rice-farming regions in the country. Like elsewhere in
Cambodia, the use of formal credit for agriculture in these villages is a prin-
cipal driver of agrarian transformation, funding costs of production as farm-
ers have become more dependent on regional and international commodity
markets (Green, 2022b; Guermond et al., 2022). However, households have

4. Interview, CMA staff member, Phnom Penh, 14 September 2022.

Performance Indicators and Informal Debt in Cambodia 789

also diversified their sources of income, reflective of national trends. Given

these changing livelihood dynamics, MFIs and banks are increasingly tar-
geting small- and medium-sized enterprises in the non-agricultural sector,
shifting away from ‘micro’ credit solely for agriculture.
As households in Battambang Province become more dependent on
formal credit for their livelihoods, many have begun to experience hard-
ships associated with too much debt. Indeed, as is the case in countries
such as India, Mexico and South Africa (Bateman et al., 2019), the micro-
finance industry in Cambodia has become a driver of over-indebtedness in
the past decade. Throughout the 2010s, according to multiple nationally rep-
resentative studies on over-indebtedness, between 25 and 50 per cent of all
microfinance borrowers across the country had to make monthly loan pay-
ments that were greater than their incomes (for a review, see Bliss, 2022:
46). Due to these high payments, 65 per cent of borrowers reported making
some kind of sacrifice to repay their loans (MFC and Good Return, 2017:
49–51). For instance, they resorted to migrating out of rural areas, cutting
back on food consumption, taking children out of school, and/or entering
into debt bondage in the country’s brick-kiln industry, all to repay their loans
(Bliss, 2022; Green and Bylander, 2021; Guermond et al., 2022; Natarajan
et al., 2021; Seng, 2018). Even with these strategies, given that 82 per cent
of the industry’s loan portfolio is collateralized with land titles,5 an estim-
ated 167,400 households have sold their land to repay loans in the past five
years alone (Bliss, 2022: 83).
Not surprisingly, the microfinance industry has faced serious criticism as a
result of this mounting evidence of over-indebtedness. In 2019, the Cambod-
ian League for the Promotion and Defense of Human Rights (LICADHO),
a leading Cambodian human rights group, began collaborating with other
organizations to document the abuses of the industry. Based on this re-
search, they launched a campaign calling on the industry to immediately
return borrowers’ land titles used as collateral, to provide debt relief to
people who cannot repay their loans, and to compensate borrowers for the
harms caused by lending malpractice (Equitable Cambodia and LICADHO,
2021: 2). Moreover, the campaign has launched two separate complaints
against the International Finance Corporation and the private microfinance
fund, Oikocredit, for violating their own investment policies. In response,
in 2022, the Compliance Advisor Ombudsman of the International Finance
Corporation launched its first formal investigation into the corporation’s role
in facilitating abuses within the microfinance industry (LICADHO, 2022a,
2022b).
Yet, in the face of such criticisms, industry leaders, state regulators and
foreign investors have consistently argued that microfinance contributes to
rural development in Cambodia, hailing it as the ‘backbone’ of the country’s

5. Interview, Credit Bureau of Cambodia senior manager, Phnom Penh, 15 September 2022.
790 W. Nathan Green et al.

economy (Kimsay, 2019a). In its recent national financial inclusion strategy,

the government stated that, ‘Financial inclusion has become instrumental
to addressing the country’s economic growth, reducing inequality, and de-
creasing overall national poverty rates’ (RGC, 2019: ix). Moreover, devel-
opment finance institutions continue to fund the industry in the name of
financial inclusion, providing US$ 717 million in financing in 2021, when
over-indebted borrowers struggled to repay their loans during the COVID-19
pandemic.6 In a newspaper op-ed during the pandemic, Germany’s ambas-
sador to Cambodia and the Cambodian director of Germany’s development
bank, KfW, justified their country’s ongoing investments by claiming that
microfinance has helped promote business, boost incomes and create new
jobs (Berger and Huettenrauch, 2021).
Despite making such claims, the industry almost never directly tracks the
social impact of microfinance. Spokespeople at the CMA told us that their
association had done no systematic study of microfinance impact.7 Like-
wise, of the 10 MFIs and banks with whom we spoke, eight told us that
they had no internal monitoring system to assess impact. Of the other two
institutions, one chief executive officer (CEO) told us that his institution
tracks social impact every five years.8 However, these studies have no con-
trol group, a commonly accepted method for evaluating microfinance im-
pact even though this method has its own flaws. Another MFI uses a poverty
probability index tool to measure poverty levels among only its group loan
borrowers, who represent a minority in its overall loan portfolio. In addition,
this tool does not track incomes or other indices of impact such as well-being
or empowerment.9 Finally, the World Bank recently observed that the few
existing studies about the impact of microfinance on household welfare in
Cambodia have been inconclusive (Obert et al., 2019: 8).
With no conclusive studies demonstrating microfinance’s social impact,
industry and government leaders have justified their claims about micro-
finance primarily by citing financial performance indicators. Of these indic-
ators, portfolio outreach and quality are most commonly used as proxies for
positive social impact. Within Cambodia’s microfinance industry, following
global standards, portfolio outreach measures the number of active clients

6. See: www.cgap.org/research/data/funding-explorer-interactive-data-for-2021-cgap-funder
-survey
7. Interview, CMA staff member, Phnom Penh, 14 September 2022. Since our interview, the
association has commissioned a study to assuage concerned investors and respond to public
criticisms. However, they awarded the contract for the study to M-CRIL, which is a staunch
supporter of the commercial microfinance industry and whose co-owners have sat on the
boards of several large MFIs in Cambodia, raising conflict-of-interest concerns about this
study.
8. Interview, MFI CEO, via Zoom, 15 December 2021.
9. Interview, MFI CEO, via Zoom, 25 February 2022.
Performance Indicators and Informal Debt in Cambodia 791

or accounts, and is used to track portfolio growth.10 Portfolio quality is usu-

ally tracked using the metrics of portfolio at risk (PAR, described above) and
non-performing loan (NPL) rates (an NPL is a loan which is 30 days past
due if the loan is for less than one year, or 90 days past due if it is for more
than one year). Certainly, these indicators serve a financial purpose: they are
measured, audited, and reported monthly to inform foreign investors about
portfolio risk and profitability.11
Aside from this financial purpose, however, industry and governmental
leaders regularly reference these performance indicators in their public
statements defending the industry against accusations that it has caused
over-indebtedness. For instance, the chairman of the CMA argued in a 2019
speech that, ‘The microfinance sector is actively contributing to driving
Cambodia’s rural economic development …. Along with the rapid growth of
microfinance sector, over-exceeding debts among Cambodian people remain
very low’ (Pisey, 2019). Similarly, following public concern over micro-
finance debt-driven land sales in 2019, the CEO of a large MFI claimed that
the industry had helped improve livelihoods, stating that an ‘NPL rate of 1
per cent reflects the healthy growth of the MFI sector’ (Kimsay, 2019b). This
same argument was common during the COVID-19 pandemic, when private
debt to the microfinance sector grew at a breakneck rate of 24.7 per cent
even as borrowers struggled to repay their loans (Sokmean, 2023). In an in-
terview with a national newspaper, Khmer Times (2022), the governor of the
National Bank of Cambodia stated that, ‘[The] microfinance sector remains
robust and contributes to the socio-economic development of Cambodia. As
of August 2022, the overall NPL ratio remains manageable at 2.5%’. Finally,
PAR remains a key indicator of social impact among investors as well. For
example, on its global data platform, Atlasdata.org, the microfinance rating
company MicroFinanza encourages investors to see PAR as a proxy of the
UN’s Sustainable Development Goal no. 1 — poverty reduction.
These references to portfolio outreach and quality as indicators of positive
impact are not confined solely to public-facing contexts. They were also
common in our interviews with industry executives and managers. Consider
this statement by a branch manager of a large bank in Battambang Province:
Interviewer: Has [your bank] done any study to collect data on how your loans have helped
the livelihoods of borrowers?
Respondent: We don’t have this. We only have information about our customers. For ex-
ample, a customer borrowed to buy a motorbike to do business and after a while he could

10. In terms of outreach, the industry often cites the number of rural and female borrowers as
a proxy measure for rural development and women’s empowerment, respectively. However,
these metrics are used mostly within reports to shareholders and investors. They were rarely
brought up in our interviews when we asked about the impact of microfinance.
11. While both MFIs and banks have other metrics to track portfolio quality, PAR and NPL
were the most commonly referenced in our discussions. Moreover, PAR is the only metric
regularly reported on by the CMA to industry leaders and investors.
792 W. Nathan Green et al.

repay and even save money to buy one more motorbike for his child. We have studied cases
like these and have seen the positive impacts of our loans. We don’t have the exact data, but
I think over 90 per cent of our borrowers have better livelihoods. Our loan portfolio does
reflect this. Our customers are also our partners; if their business/livelihoods grow, we also
grow. We want to grow better together as partners.

Interviewer: So, do you think that bigger loan requests reflect livelihood improvement?
Respondent: Yes.12

In a separate interview, the CEO of an MFI told us that his institution’s low
NPL rate proved his institution had a positive impact:
Interviewer: How does your institution actually measure the impact of your financial services
on rural development and livelihoods?
Respondent: There is no research team, or any research activity, to assess whether loans
reduce poverty. However, it might contribute to improving rural livelihoods, because people
borrow money to run businesses and they can earn more income from that. It can also be
seen from the bank’s non-performing loan rate, which is still less than 3 per cent. So, we can
consider this a positive impact.13

These responses follow the same arguments originally put forward by ad-
vocates of the financial systems approach to microfinance: rising household
microfinance debt is not a sign of over-indebtedness, but an indicator of de-
velopment — so long as debts are repaid on time. However, in the context
of a competitive, commercial industry operating in a landscape of inform-
ality, are loan numbers and portfolio quality actually indicative of positive
outcomes for borrowers?

JUGGLING DEBT: THE UNDERSIDE OF MICROFINANCE

To address this question, we now examine household borrowing practices.

We demonstrate that borrowers’ capacity to repay MFI loans often depends
on juggling debt between the formal and informal sectors. Yet debt juggling
is rendered invisible by metrics of portfolio quality, since PAR and NPL
rates do not distinguish between clients who are capable of repayment
based on their income and those who must juggle their debts to repay their
formal loans, among other harmful coping strategies. We further show that
these performance indicators actually serve to encourage debt juggling,
because as actors across the microfinance industry try to improve portfolio
quality, borrowers are pressured to make repayments in any way possible.
In other words, the metrics that the industry relies on as indicators of its
positive social impact both hide and help produce complex, risky forms of
indebtedness.

12. Interview, bank branch manager, Battambang Town, 9 May 2022.

13. Interview, bank CEO, via Zoom, 6 November 2021.
Performance Indicators and Informal Debt in Cambodia 793

Table 1. Summary of Borrowing Data in Sala and Baku Villages (n = 52)

Percentage of households with formal debt 43%
Percentage of households with informal debt 35%
Percentage of households with formal debt that also juggle informal debt 32%
Average formal interest rate, excluding fees (monthly) 1.5%
Average local moneylender interest rate (monthly) 3–5%
Average daily lender interest rate (monthly) 20–30%

Source: Authors’ compilation.

Contrary to the way microfinance has often been framed, the growth of the
industry has not stopped people from seeking out informal loans. National
data show that one in three adults borrow from a combination of formal and
informal sources (RGC, 2019: 15). In the villages of Baku and Sala, where
we conducted our research, people similarly borrowed from both types of
lenders (see Table 1). On the one hand, 43 per cent of the households we
interviewed held a loan with a bank or MFI. The primary reason is that these
institutions offer lower interest rates than informal lenders, averaging 1.5 per
cent per month (excluding fees and other service charges). Formal lenders
are also able to provide large loans because they lend against land-based
collateral. Informal loans are smaller because lenders either lack sufficient
money to lend as much as banks and MFIs, or they refuse to do so because
the risks are too high. As such, households turn to bank and MFI loans
to make large purchases, such as for home renovation or lump-sum farm
expenses.
On the other hand, 35 per cent of the households we interviewed
held a loan with an informal lender. These lenders include family mem-
bers, neighbours, agricultural supply merchants, landlords and professional
moneylenders. They all offer credit on variable terms, based on their re-
lationship with the borrower. Whereas family and close neighbours may
provide small loans at little to no interest, moneylenders charge on aver-
age 3 to 5 per cent per month, with lower interest for more reputable, and
better-known, borrowers. Few of these lenders require collateral on loans.
In addition to these local lenders, there has been a rise in daily lenders (luy
roab) and pawnshops in the past two years. These lenders are based outside
of the villages, driving in to loan money to take advantage of households
struggling with the loss of income from the COVID-19 pandemic. They
charge between 20 and 30 per cent per month — by far the highest interest
rates of all informal lenders.
There are several reasons why households borrow informally. First, in
contrast to MFI loans, informal loans are quickly accessible in times of
need, such as an accident or health emergency. Most informal lenders are
located nearby and can be contacted outside of business hours. Second, and
relatedly, informal lenders require little to no official paperwork. They can
provide loans to borrowers with less hassle. One villager explained to us:
794 W. Nathan Green et al.

‘Borrowing from merchants has a high interest rate. However, as long as we

have an agreed deal with each other, we can get cash immediately. Banks
take a long time — they require many things, which is why the villagers
don’t like banks’.14 Third, informal lenders tend to be more flexible regard-
ing repayments, especially if there is a close social connection between the
lender and borrower. A police officer who also farmed in Sala village ex-
plained: ‘With moneylenders, it is easier [than with MFIs]. If we cannot
meet the set date of repayment we can personally communicate. We live in
the same village so we can always talk if we don’t have enough to repay
yet. We cannot do that with MFIs’.15 In Baku and Sala villages, formal and
informal finance thus serve complementary purposes, a finding reflected in
previous studies of rural financial landscapes in Cambodia (Bylander, 2015;
Green, 2020b; Ovesen and Trankell, 2014).
Crucially, we also found that 32 per cent of interviewed households with
a formal loan turned to informal lenders to repay their formal loans, because
their monthly loan repayments often exceeded their household monthly in-
come. This proportion closely matches the number of households found to
be objectively over-indebted nationwide over the past 10 years (Liv, 2013;
MFC and Good Return, 2017). While hardships in Baku and Sala villages
increased during the COVID-19 pandemic, households were already facing
difficulties repaying their loans, especially when they experienced an emer-
gency such as an accident or a flood. Another challenge for farm households
is that their income is seasonal, which means that they often lack sufficient
cash flow to pay monthly instalments before their harvest.16 Even though
MFIs and banks claim to synchronize loan repayment with farm income,
this applies only to principal payments. There is thus a mismatch between
farmers’ cash flow and the timing of their loan repayments — a common
driver of juggling practices in farm communities (Harriss-White, 2014).
Despite these repayment challenges, households in Baku and Sala villages
felt obligated to make their monthly repayments. Most explained that they
repaid their loans on time because they were fearful of late repayment fees,
diminished credit scores or losing their land used as collateral. Others stated
that they had a responsibility to repay, given that they signed a contract and
willingly took on the debt. Even though such repayments caused some to
lose sleep, they did not want to feel burdened by the shame of failing to
repay a debt. For instance, one family told us that their aging mother had
sold land before she died so that she would not have a debt hanging over
her in the afterlife, which would cause her to be reborn at a lower status.17
While such feelings of responsibility might be ascribed to a culturally
specific morality of debt, it is important to note that the microfinance

14. Interview, farmer, Baku village, 24 May 2022.

15. Interview, police officer, Sala village, 11 May 2022.
16. Interview, farmer, Sala village, 23 May 2022.
17. Interview, farmer, Sala village, 21 May 2022.
Performance Indicators and Informal Debt in Cambodia 795

industry in Cambodia has also made a concerted effort to enforce repayment

discipline since the 1990s (Bylander and Res, 2021). At that time, according
to an MFI CEO who has worked in the industry for more than 20 years, bor-
rowers frequently defaulted on their loans because they considered micro-
finance to be a form of charity.18 Consequently, the industry has hosted
workshops across the country for more than two decades to provide finan-
cial literacy training on the responsibility of borrowers to repay on time.19
More recently, in 2017, the government launched a national public aware-
ness campaign to encourage people to repay their debts in a direct rebuke to
a political opposition party that was campaigning on a platform of micro-
finance debt relief.
Accordingly, to repay their microfinance debts, over-indebted households
have turned to informal lenders. One family in Baku told us that they had
never been late on a monthly repayment, because if they did not have money,
then they would turn to the local moneylender in town.20 This kind of jug-
gling is known in Cambodia as ‘circulating credit’ (bangvil luy). It has been
widespread across Cambodia for at least a decade, since the country became
saturated with microfinance loans (Liv, 2013). Circulating credit further in-
creased during the COVID-19 pandemic, when households lost income but
still had to pay monthly interest (Res, 2021). In addition to interest pay-
ments, we also found that farm households struggled with agricultural loans
structured around lump-sum payments when they did not receive a good
harvest or had to pay for unforeseen expenses like medical bills. While cir-
culating credit could be interpreted as a strategic use of local interdepend-
ency (Guérin, 2014), such forms of multiple- and cross-borrowing actually
increase the risks of becoming over-indebted in Cambodia’s over-saturated
market (Liv, 2013).
These risks are especially high when borrowers juggle informal debt to
refinance their microfinance loans. Indeed, household debt in Cambodia has
skyrocketed often because of borrowers using their new, larger loans to re-
pay their previous bad loans (Green and Bylander, 2021: 210). To refinance
a loan early, borrowers face two major constraints, which juggling debt helps
to overcome. First, formal loans are collateralized with land titles. Unless a
household has multiple titles to deposit with different institutions, the only
way to borrow from one bank or MFI to repay another is to first get back the
collateral. Second, the National Bank of Cambodia has supported industry
self-regulations to crack down on early loan refinancing. These regulations
make it more difficult to take out a loan from one bank to repay another.
As a result of these constraints, borrowers in Baku and Sala villages who
refinanced their loans reported taking out informal loans to repay the bank

18. Interview, MFI CEO, Phnom Penh, 15 September 2022. Today, MFIs and banks are still
commonly referred to as angkar, the Khmer word used for an NGO.
19. Interview, MFI CEO, Phnom Penh, 15 September 2022.
20. Interview, farmer, Baku village, 23 May 2022.
796 W. Nathan Green et al.

or MFI that held their land title. Once they had been given their title, rather
than hold onto the expensive informal loan, these borrowers then took out
new, larger loans either with a different MFI or with the same one at a later
date.21
These kinds of debt-juggling practices underpin the ‘good’ portfolio qual-
ity and rapid growth of loan sizes in Cambodia’s microfinance industry
(MIMOSA, 2020). Juggling debt to make monthly loan payments directly
keeps PAR rates low, as borrowers can meet strict repayment deadlines. At
the same time, juggling debt to refinance new, larger loans helps to expand
the overall size of a loan portfolio. Such loan churning may stop PAR from
rising, because this metric is expressed as a ratio between late loans and
portfolio size. Even if the number of people repaying late or defaulting on
their loans increases, PAR can be kept low by a growing portfolio driven
by early loan refinancing. Yet these effects of juggling practices are not cap-
tured by the industry’s primary metrics of portfolio quality. While we are not
claiming that all formal loans are repaid by juggling debt, based on the ex-
periences in the villages of Baku and Sala, it is clearly one way that people
are repaying their loans. This suggests that the microfinance industry de-
pends on informal financial markets to maintain its high-quality portfolio
(see also Bylander, 2015; Ovesen and Trankell, 2014).
Furthermore, portfolio quality has itself become a driver of debt juggling
within Cambodia’s competitive financial market, where banks and MFIs ag-
gressively vie for new borrowers. In this context, credit officers often en-
courage borrowers to juggle debt to make their loan payments. Across the
industry, portfolio quality is one of the key factors that determines whether
credit officers receive bonuses. A credit officer with very few NPL loans will
be rewarded, sometimes with an amount equivalent to their base salary.22
However, if a credit officer goes above a threshold NPL rate, around 2 per
cent, then they will not receive any bonus.23 Industry leaders told us that
they tie credit officers’ pay to NPLs to mitigate risky portfolio expansion.
Credit officers are encouraged to not only sell new loans, but to make sure
borrowers have the capacity to repay those loans. However, assessing bor-
rowers’ capacity to repay loans is easily undermined in Cambodia, because
82 per cent of microfinance loans are secured with land-based collateral. As
a CEO of one of the few MFIs that does not lend on collateral explained, col-
lateralized loans substitute for the prudent assessment, confidence building
and trust making that are crucial for risk-based cash flow lending.24
In lieu of proper loan assessment, credit officers maintain their portfolio
quality through aggressive loan collection, a defining characteristic of the
commercial microfinance industry globally (Afonso et al., 2017; Kar, 2018;

21. Interview, farmer, Sala village, 21 May 2022.

22. Interview, MFI CEO, via Zoom, 23 September 2022.
23. Interview, MFI CEO, Phnom Penh, 15 September 2022.
24. Interview, MFI CEO, Phnom Penh, 3 May 2022.
Performance Indicators and Informal Debt in Cambodia 797

Karim, 2011; Maîtrot, 2019). In Cambodia, tactics include shaming borrow-

ers to repay their loans, bribing local state authorities to pressure borrowers
and threatening borrowers that their collateralized land will be repossessed
(Green, 2020a).25 While we heard accounts of all these collection strategies
in the villages of Baku and Sala, credit officers most frequently asked cli-
ents to borrow from either a relative, neighbour, or moneylender in order to
repay their formal loan — in other words, to juggle debt. According to one
household in Sala village:
Interviewer: What did credit officers do to ensure that you repaid your loan? For instance, if
you are late, did they call you or make a home visit?
Respondent: They would call us. They called and asked what the reasons were that we were
late. Although they spoke to us politely, they also mentioned that ‘If you don’t have it, could
you try to borrow from other people to pay us?’. As such, I tried to find others accordingly.
It was difficult during COVID-19, so we had to borrow from another lender, because my
relatives could not help us.26

We spoke to a moneylender in Sala village who provided daily loans to

people within her community, many of whom struggled to repay their micro-
finance debts. She told us that:
When it’s time to pay the monthly interest, villagers take out daily loans from the private
lenders. They use the daily loan [luy roap] to pay the bank’s monthly interest. They become
indebted to even more loans. The only thing the bank knows is getting the monthly interest,
they don’t care if you could earn the money to pay them back or not.27

Accounts of credit officers encouraging their clients to borrow from in-

formal lenders are not confined to our study villages. In a recent study, for
example, 5 out of 14 communities around the country reported that credit
officers had encouraged borrowers to go to an informal lender so that they
could make their monthly repayment (Equitable Cambodia and LICADHO,
2021). Incentivized with bonus pay, credit officers are thus important drivers
of debt-juggling practices.
While credit officers play an important role, the pressures to improve port-
folio quality — and thus to encourage borrowers to repay loans through any
means possible — extend across scales within the financialized industry
(Mader, 2015). At the management level, within both branch offices and
national headquarters, the importance of maintaining portfolio quality has
increased following acquisition by foreign shareholders. These new owners
have invested billions of dollars into the industry in the past five years. Many
of the new shareholders are focused on achieving high returns on equity to

25. Aggressive loan collection is likely to intensify with the arrival of new digital lending com-
panies to Cambodia, such as Boost Capital. These lenders have modelled their operations
on digital lenders in countries like Kenya, where the digital lending industry has driven a
boom in debt-collection firms, which often secure loan repayment through extremely coer-
cive measures (Bernards, 2022: 173).
26. Interview, farmer, Sala village, 21 May 2022.
27. Interview, moneylender, Sala village, 21 May 2022.
798 W. Nathan Green et al.

justify their investments (Bateman, 2019). While shareholder demand for

profit is variable across institutions within the sector, it has nevertheless led
to several of the largest institutions transforming their operations to achieve
even higher rates of return. For example, in 2017, when the Sri Lankan firm
LOLC purchased majority shares in PRASAC, Cambodia’s largest MFI, it
began to aggressively expand its loan portfolio to provide profits for its new
parent company. To do so, PRASAC regularly refinanced loans, aggressively
sold loans and coerced borrowers to repay, all in violation of the industry’s
own code of conduct. While it lost its certification as a responsible lender,
driving away its long-time supporters from Europe, it made up for this by
selling its shares to KB Kookmin Bank, a South Korean regional bank with
little commitment to social responsibility.28
Maintaining portfolio quality is also a primary concern for investors lend-
ing money to Cambodia’s banks and MFIs. These investors include develop-
ment finance institutions, European microfinance investment vehicles, East
Asian commercial banks and domestic banks. MFIs use loans from these
investors to on-lend to clients. As part of the loan contracts with these
mostly foreign lenders, Cambodian banks and MFIs must abide by strict
financial covenants. The most common covenant is tied to portfolio qual-
ity, specifically NPL rates. If an institution’s NPL rate breaches that dic-
tated by the covenant (generally 5 per cent), then the lender can claw back
their funds. Moreover, a high NPL rate can either raise the cost of the loan
or make it more difficult for an institution to borrow funds in the future.29
In other words, without maintaining low NPL rates, Cambodian banks and
MFIs would not be able to access affordable financing to compete in a sat-
urated market. The CEO of a large bank that provides microloans told us
that after the COVID-19 pandemic, his company’s NPL rates began to rise.
Consequently, he started investing more into his collections team to bring
his institution’s NPL rate back down.30 The pressure placed on borrowers to
repay their loans on time, often by juggling debt, is thus directly tied to the
profit imperatives of financial investors outside of Cambodia.

CONCLUSION

In the context of a highly commercial microfinance industry, juggling debt

has increased the risks of becoming over-indebted in Cambodia. The in-
dustry’s strict repayment schedules, collateralized loan contracts and ag-
gressive collection practices have pushed households to borrow from in-
formal lenders to make monthly loan repayments, or to act as a bridge to
refinance new, larger loans. From the industry’s perspective, however, high

28. Interview, MFI CEO, Phnom Penh, 3 May 2022.

29. Interview, MFI CEO, Phnom Penh, 15 September 2022.
30. Interview, bank CEO, Phnom Penh, 14 September 2022.
Performance Indicators and Informal Debt in Cambodia 799

repayment rates coupled with a growing loan portfolio are key indicators
of how microfinance makes a positive social impact. Accordingly, both in-
dustry leaders and the Cambodian government have called for the continued
expansion of microfinance.
We have challenged this conclusion by critically analysing the debt-
juggling practices of rural households in Battambang Province. We argued
that the microfinance industry depends on the ongoing use of informal fi-
nance, and that metrics of portfolio quality such as portfolio at risk and non-
performing loans do not take these practices into account. In addition, due to
the competitive pressures of a financialized industry, the focus on managing
portfolio quality has become a driver of juggling debt. Investors put pressure
on institutional managers, who in turn have incentivized credit officers with
performance bonuses to pursue aggressive debt collection. Juggling debt is
thus an important element of the financialization of poverty in Cambodia.
Through this research, we have contributed to critical scholarship on mi-
crofinance in two ways. First, our findings build on existing studies demon-
strating that informal debt is not only a pervasive feature of formal micro-
finance, but that these two forms of finance co-produce one another (Guérin
et al., 2014). By analysing debt-juggling practices in relation to the rise
of financial indicators governing the microfinance industry today, we have
shown how borrowing practices are actively restructured in ways that
underpin finance capital accumulation. Second, and relatedly, through our
grounded study of the complex juggling practices of households, we have
explained how the financialization of poverty remains intertwined with
informal relations of debt. While scholars of financialization have examined
the knowledge production, institutional management, and technologies that
have turned microfinance into a global industry (Aitken, 2013; Mader,
2015; Roy, 2010), this work also needs to better understand the labour
of debt juggling required to enfold microfinance borrowers into a global
financial system (Kar, 2018). By bringing together these two bodies of
scholarship through an analysis of performance indicators and debt jug-
gling, our research provides a novel take on the connection between global
finance and the everyday lives of microfinance borrowers.
Finally, our research offers an important lesson for immediate reforms to
the commercial microfinance industry. Investors, managers and regulators
within the industry often claim that their services promote a positive social
impact based on financial performance indicators such as portfolio quality.
However, these indicators hide how people are juggling debt from informal
lenders to repay their loans. Consequently, claims about the social impact of
microfinance are based on a flawed understanding of household borrowing
practices. Correcting this problem within the commercial industry is par-
ticularly important given current efforts to expand formal financial services
in the name of financial inclusion — a development policy goal adopted
by governments around the world. State regulators ought to require regular,
transparent and third-party impact studies on financial services. Although
800 W. Nathan Green et al.

proponents of commercial microfinance have long fought against such a

regulatory requirement, it is clear that outsourcing the monitoring of impact
to lenders themselves is a serious problem. Lenders not only fail to measure
the impact of their services, but they also have a conflict of interest in re-
porting on the abuses that their services have caused. So long as repayment
rates are considered an indicator of success, then the risks associated with
juggling debt are likely to increase.

REFERENCES

Afonso, J.S., S. Morvant-Roux, I. Guérin and D. Forcella (2017) ‘Doing Good by Doing Well?
Microfinance, Self-regulation and Borrowers’ Over-indebtedness in the Dominican Repub-
lic’, Journal of International Development 29(7): 919–35.
Aitken, R. (2013) ‘The Financialization of Microcredit’, Development and Change 44(3): 473–
99.
Bateman, M. (2010) Why Doesn’t Microfinance Work? The Destructive Rise of Local Neoliber-
alism. London: Zed Books.
Bateman, M. (2019) ‘In the Business of Doing Good? Some Insights from a Cambodian So-
cial Enterprise’. Paper presented at the 9th International Scientific Conference on Tourism,
Innovations and Entrepreneurship, Poreč (26–27 September).
Bateman, M. and K. Maclean (eds) (2017) Seduced and Betrayed: Exposing the Contemporary
Microfinance Phenomenon. Albuquerque, NM: University of New Mexico Press.
Bateman, M., S. Blankenburg and R. Kozul-Wright (eds) (2019) The Rise and Fall of Global
Microcredit: Development, Debt and Disillusion (1st edn). London: Routledge.
Berger, C. and H. Huettenrauch (2021) ‘Opinion: Economic and Political Relevance of Microfin-
ance for Cambodia’, Cambodianess 29 March. https://cambodianess.com/article/opinion-
economic-and-political-relevance-of-microfinance-for-cambodia
Bernards, N. (2022) A Critical History of Poverty Finance: Colonial Roots and Neoliberal Fail-
ures. London: Pluto Press.
Bevacqua, R. (2017) Building an Inclusive Financial Sector: Microfinance and Market-led De-
velopment in Cambodia — A History. Phnom Penh: National Bank of Cambodia.
Bliss, F. (2022) ‘“Micro” Finance in Cambodia: Development, Challenges and Recommend-
ations’. Duisburg: Institute for Development and Peace (INEF), University of Duisburg-
Essen.
Bylander, M. (2015) ‘Credit as Coping: Rethinking Microcredit in the Cambodian Context’,
Oxford Development Studies 43(4): 533–53.
Bylander, M. and P. Res (2021) ‘“If You Fall, Stand Up Again”: The Moral Nature of Financial
Literacy in the Global South’, Development and Change 52(1): 26–53.
CGAP (2006) ‘Good Practice Guidelines for Funders of Microfinance: Microfinance Consensus
Guidelines’. Washington, DC: Consultative Group to Assist the Poor.
Dattasharma, A., R. Kamath and S. Ramanathan (2016) ‘The Burden of Microfinance Debt:
Lessons from the Ramanagaram Financial Diaries’, Development and Change 47(1): 130–
56.
Equitable Cambodia and LICADHO (2021) ‘Right to Relief: Indebted Land Communities Speak
Out’. Report. Phnom Penh: Equitable Cambodia and the Cambodian League for the Promo-
tion and Defense of Human Rights (LICADHO). www.licadho-cambodia.org/reports/files/
234Report-RightToRelief-2021-en.pdf
Green, W.N. (2020a) ‘Regulating Over-indebtedness: Local State Power in Cambodia’s Mi-
crofinance Market’, Development and Change 51(6): 1429–53.
Green, W.N. (2020b) ‘Financial Landscapes of Agrarian Change in Cambodia’, Geoforum 137:
185–93.
Performance Indicators and Informal Debt in Cambodia 801

Green, W.N. (2022a) ‘Financing Agrarian Change: Geographies of Credit and Debt in the Global
South’, Progress in Human Geography 46(3): 849–69.
Green, W.N. (2022b) ‘Placing Cambodia’s Agrarian Transition in an Emerging Chinese Food
Regime’, The Journal of Peasant Studies 49(6): 1249–72.
Green, W.N. and M. Bylander (2021) ‘The Exclusionary Power of Microfinance: Over-
indebtedness and Land Dispossession in Cambodia’, Sociology of Development 7(2): 202–
29.
Green, W.N. and J. Estes (2019) ‘Precarious Debt: Microfinance Subjects and Intergenerational
Dependency in Cambodia’, Antipode 51(1): 129–47.
Green, W.N. and J. Estes (2022) ‘Translocal Precarity: Labor and Social Reproduction in Cam-
bodia’, Annals of the American Association of Geographers 112(6): 1726–40.
Guérin, I. (2014) ‘Juggling with Debt, Social Ties, and Values: The Everyday Use of Microcredit
in Rural South India’, Current Anthropology 55(S9): S40–S50.
Guérin, I. and G. Venkatasubramanian (2020) ‘The Socio-economy of Debt. Revisiting Debt
Bondage in Times of Financialization’, Geoforum 137: 174–84.
Guérin, I., S. Morvant-Roux and M. Villarreal (eds) (2014) Microfinance, Debt and Over-
indebtedness: Juggling with Money. London: Routledge.
Guermond, V. et al. (2022) ‘Microfinance, Over-indebtedness and Climate Adaptation: New
Evidence from Rural Cambodia’. London: Royal Holloway and University of London.
Harker, C. (2020) Spacing Debt: Obligations, Violence, and Endurance in Ramallah, Palestine.
Durham, NC: Duke University Press.
Harriss-White, B. (2014) ‘Debt, Credit and Contractual Synchrony in a South Indian Market
Town’, in I. Guérin, S. Morvant-Roux and M. Villarreal (eds) Microfinance, Debt and Over-
indebtedness: Juggling with Money, pp. 103–24. London: Routledge.
IMF (2016) ‘Cambodia: 2016 Article IV Consultation — Press Release; Staff Report; and State-
ment by the Executive Director for Cambodia’. IMF Country Report No. 16/340. Washing-
ton, DC: International Monetary Fund.
Johnson, S. (2014) ‘Debt, Over-indebtedness, and Wellbeing: An Exploration’, in I. Guérin, S.
Morvant-Roux and M. Villarreal (eds) Microfinance, Debt and Over-indebtedness: Juggling
with Money, pp. 64–85. London: Routledge.
Kar, S. (2018) Financializing Poverty: Labor and Risk in Indian Microfinance. Redwood City,
CA: Stanford University Press.
Karim, L. (2011) Microfinance and its Discontents: Women in Debt in Bangladesh. Minneapolis,
MN: University of Minnesota Press.
Khmer Times (2022) ‘As Cambodia’s Economy Is Back on its Recovery Track, the NBC Gradu-
ally and Cautiously Withdrew the Regulatory Forbearance’, Khmer Times 25 October.
Kimsay, H. (2019a) ‘Financial Sector in Cambodia in 2018 Maintains its Strength’, Post Khmer
31 January.
Kimsay, H. (2019b) ‘NPL Rate in 2018 Falls to 1%’, Post Khmer 12 February.
Ledgerwood, J. (1999) ‘Microfinance Handbook: An Institutional and Financial Perspective’.
Washington, DC: World Bank.
LICADHO (2022a) ‘Statement: IFC Watchdog Moves to Compliance Stage of Cambodian
Microloan Complaint’. Press release 15 November. Cambodian League for the Promotion
and Defense of Human Rights (LICADHO). www.licadho-cambodia.org/pressrelease.php?
perm=502.
LICADHO (2022b) ‘Statement: Human Rights NGOs File Complaint against Oikocredit
over Cambodian MFI Investments’. Press release 12 December. Cambodian League for
the Promotion and Defense of Human Rights (LICADHO). www.licadho-cambodia.org/
pressrelease.php?perm=506.
Liv, D. (2013) ‘Study of the Drivers of Over-indebtedness of Microfinance Borrowers in Cam-
bodia. An In-depth Investigation of Saturated Areas’. CIDS report. Phnom Penh: Cambodia
Institute of Development Study.
Maclean, K. (2010) ‘Capitalizing on Women’s Social Capital? Women-targeted Microfinance in
Bolivia’, Development and Change 41(3): 495–515.
802 W. Nathan Green et al.

Mader, P. (2015) The Political Economy of Microfinance: Financializing Poverty. London: Pal-
grave Macmillan.
Maîtrot, M. (2019) ‘Understanding Social Performance: A “Practice Drift” at the Frontline of
Microfinance Institutions in Bangladesh’, Development and Change 50(3): 623–54.
MFC and Good Return (2017) ‘Over-indebtedness Study Cambodia II: Final Report’. Phnom
Penh: Microfinance Centre (MFC) and Good Return.
MIMOSA (2016) ‘Cambodia: Multiple Borrowing and Loan Sizes: Special Circular June 2016’.
Microfinance Index of Market Outreach and Saturation – MIMOSA – Project.
MIMOSA (2020) ‘Cambodia’. Microfinance Index of Market Outreach and Saturation –
MIMOSA – Project.
Morduch, J. (2000) ‘The Microfinance Schism’, World Development 28(4): 617–29.
Natarajan, N., K. Brickell and L. Parsons (2021) ‘Diffuse Drivers of Modern Slavery: From
Microfinance to Unfree Labour in Cambodia’, Development and Change 52(2): 241–64.
NBC (2021) ‘Annual Report 2021’. Phnom Penh: National Bank of Cambodia.
Obert, P., K. Tong, R. Anantavrasilpa, A. Popovic, S. Mel and M.E. Sanchez Martin (2019)
‘Microfinance and Household Welfare: Cambodia Policy Note’. Washington, DC: World
Bank Group.
Otero, M. and E. Rhyne (eds) (1994) The New World of Microenterprise Finance: Building
Healthy Financial Institutions for the Poor. West Hartford, CT: Kumarian Press.
Ovesen, J. and I-B. Trankell (2014) ‘Symbiosis of Microcredit and Private Moneylending in
Cambodia’, The Asia Pacific Journal of Anthropology 15(2): 178–96.
Pisey, H. (2019) ‘MFI Plays Important Role in Rural Development’, Post Khmer 22 October.
Res, P. (2021) ‘Microfinance in Times of COVID-19: Consumer Protection and the Loan Re-
structuring Process in Cambodia’. San Francisco, CA: The Asia Foundation.
RGC (2019) ‘National Financial Inclusion Strategy 2019–25’. Phnom Penh: Royal Government
of Cambodia.
Robinson, M. (2001) The Microfinance Revolution: Sustainable Finance for the Poor. Washing-
ton, DC: Open Society Institute and the World Bank.
Roy, A. (2010) Poverty Capital: Microfinance and the Making of Development. London: Rout-
ledge.
Schuster, C.E. (2014) ‘The Social Unit of Debt: Gender and Creditworthiness in Paraguayan
Microfinance’, American Ethnologist 41(3): 563–78.
Schuster, C. and S. Kar (2021) ‘Subprime Empire: On the In-betweenness of Finance’, Current
Anthropology 62(4): 389–411.
The SEEP Network (2005) ‘Measuring Performance of Microfinance Institutions’. Arlington,
VA: The SEEP Network.
Seng, K. (2018) ‘Rethinking the Effects of Microcredit on Household Welfare in Cambodia’,
The Journal of Development Studies 54(9): 1496–512.
Shakya, Y.B. and K.N. Rankin (2008) ‘The Politics of Subversion in Development Practice: An
Exploration of Microfinance in Nepal and Vietnam’, Journal of Development Studies 44(8):
1214–35.
Small, M.L. (2009) ‘“How Many Cases Do I Need?”: On Science and the Logic of Case Selec-
tion in Field-based Research’, Ethnography 10(1): 5–38.
Sokmean, O. (2023) ‘Private Debt Levels Nearly Twice as Cambodian GDP’, Cambodianess 31
January.
Taylor, M. (2012) ‘The Antinomies of “Financial Inclusion”: Debt, Distress and the Workings
of Indian Microfinance’, Journal of Agrarian Change 12(4): 601–10.
Von Pischke, J.D. (1991) Finance at the Frontier: Debt Capacity and the Role of Credit in the
Private Economy. Washington, DC: World Bank.
Wampfler, B., E. Bouquet and E. Ralison (2014) ‘Does Juggling Mean Struggling?’, in I. Guérin,
S. Morvant-Roux and M. Villarreal (eds) Microfinance, Debt and Over-indebtedness: Jug-
gling with Money, pp. 211–31. London: Routledge.
Performance Indicators and Informal Debt in Cambodia 803

W. Nathan Green (corresponding author; geowng@nus.edu.sg) is an As-

sistant Professor in the Department of Geography at the National Univer-
sity of Singapore, Singapore. His work examines the political ecology of
development finance, as outlined in the recent article ‘Financing Agrarian
Change: Geographies of Credit and Debt in the Global South’ (Progress in
Human Geography, 2022).
Theavy Chhom (theavy@cdri.org.kh) is a Research Associate at the Cam-
bodia Development Resource Institute, Phnom Penh Cambodia. Her re-
search focuses on poverty, local governance, gender and inclusive devel-
opment. She is one of the authors of ‘“Worn Out”: Debt Discipline, Hunger,
and the Gendered Contingencies of the COVID-19 Pandemic amongst Cam-
bodian Garment Workers’ (Social & Cultural Geography, 2022).
Reach Mony (reachmony28@gmail.com) is a Research Assistant at the
Cambodia Development Resource Institute, Phnom Penh Cambodia. Her
research interests revolve around social protection, gender and social inclu-
sion. She is one of the authors of ‘“Worn Out”: Debt Discipline, Hunger, and
the Gendered Contingencies of the COVID-19 Pandemic amongst Cambod-
ian Garment Workers’ (Social & Cultural Geography, 2022).
Jennifer Estes (socjee@nus.edu.sg) is a Lecturer in the Department of So-
ciology and Anthropology at the National University of Singapore, Singa-
pore. Her research examines how changes in Cambodia’s political economy
shape the daily lives of youths and their families. She recently authored ‘A
High Price to Pay: Weddings and Waithood in Cambodia’ (The Asia Pacific
Journal of Anthropology, 2022).
Copyright of Development & Change is the property of Wiley-Blackwell and its content may
not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's
express written permission. However, users may print, download, or email articles for
individual use.