Credit as Coping: Rethinking Microcredit in the Cambodian Context

• In Event: 504 - Section on Economic Sociology Paper Session. Credit, Poverty and Inequality

Abstract

This article explores the uses and meanings of microcredit in Cambodia, offering evidence to suggest that what microcredit asserts it provides is substantively different than what it means in practice for many rural Cambodian borrowers. In particular, my findings suggest three key disconnects between the rhetoric and reality of micro-lending. First, while MFIs assert that loans are used for and repaid via microenterprise, my data suggest that loans are primarily used for a variety of non-productive purposes, and are most frequently repaid through wage labor both within and outside the country. Second, whereas MFIs assert that microcredit offers a substitute to high-interest informal loans, in practice formal credit is often used alongside informal credit and drives the need for higher-interest informal borrowing. Third, whereas loans are argued to offer proactive ways of livelihood improvement, in practice borrowers often struggle to repay loans, and note that debt can substantively heighten vulnerabilities. These findings challenge the primary goals and stated expectations of microcredit, and suggest that the need for a rethinking of microcredit as a development strategy in the Cambodian context.

Author

• Maryann Bylander, University of London