Cambodia rate-cap research: lower costs, larger loans and slightly more informal credit

Implications for lenders

Under the 18% ceiling, the research linking the cap to larger loans points lenders toward underwriting on repayment capacity, including household income, spending and all existing debt. Because informal borrowing does not show in bureau records, lenders may add borrower questions on informal debt and flag repeated refinancing, which can give collections teams earlier warning of stress.

Implications

Facts

Source: the policy note "Microfinance at a Crossroads in Cambodia: Toward Responsible and Sustainable Financial Inclusion" was published by the JICA Ogata Research Institute in October 2026. Its authors are Sovannroeun Samreth (Saitama University and the JICA institute), Daiju Aiba (the JICA institute and the National Bank of Cambodia) and Voeun Sok (Cambodia Microfinance Association, CMA); the views are the authors' own.

Sector size: citing CMA data, the note puts outstanding microfinance loans at USD 5.99bn ¹ at end-2025, equal to about 12% of GDP ², with 1.53 million active borrowers ³ and about 2.21 million depositors. ⁴ Citing Aiba and Samreth (2026), it says MFI assets grew 23-fold between 2009 and 2023 ⁵, against about fivefold for commercial banks. ⁶ Deposits became a primary funding source for deposit-taking MFIs, and several large MFIs were acquired by foreign banks.

Rate cap: the NBC Prakas on Interest Rate Ceiling on Loan set a ceiling of 18% a year ⁷ for new loan contracts of MDIs, MFIs and rural credit operators from 1 April 2017. The note summarises a household-survey study by Samreth, Aiba, Oeur and Vat (2023, Empirical Economics): the ceiling reduced average interest rates and effective borrowing costs, and was associated with a larger average loan size among smaller loans and a small increase in informal borrowing, which the authors read as possible credit rationing or a change in lending behaviour. It also cites a 2021 JICA working paper based on credit-registry data, which found that MFIs raised average loan sizes and collateral requirements and that some small-loan and non-collateral borrowers became more likely to lose formal credit, and a 2021 IMF working paper by Heng, Chea and Heng, which found higher non-interest fees and a short-run shift toward larger borrowers.

Debt visibility: under the ABC–CMA Lending Guidelines, loans are reported weekly to Credit Bureau Cambodia, but the note points out that informal borrowing does not appear in formal credit reporting, so a borrower can look manageable in formal records while carrying informal debt. It describes land collateral as a factor that can limit formal borrowing and lead to distress land sales, and calls the evidence on welfare effects mixed. The CMA's Safe Finance in Community programme, launched in July 2022, reached 2,083 villagers in 2025. ⁸

Recommendations: approve loans mainly on repayment capacity (income, expenditure, existing debt and vulnerability to shocks) rather than collateral, with extra care for households holding IDPoor equity cards; run periodic household surveys covering formal and informal borrowing and track debt-service burden, arrears, repeated refinancing and asset sales; review the ceiling regularly together with fees, loan sizes, informal borrowing and access for poorer borrowers; and create a personal insolvency and debt-restructuring framework. The authors write that "multiple loans should not automatically be treated as harmful".

Analysis

Loan size: dividing the CMA portfolio by active borrowers gives about USD 3,900 outstanding per borrower at end-2025 (T&S calculation). ⁹ The figure counts borrowers with several loans once and is not an average loan size, but it shows why the research's finding on larger loans matters: a price ceiling leaves lenders less room to charge for the cost and risk of very small loans, and the cited studies find that the adjustment came partly through loan size, collateral and fees rather than through price alone.

Cross-country: Cambodia's main tool is a price ceiling. India's framework instead caps a low-income household's monthly loan repayments at 50% of its monthly income across all lenders ¹⁰, and industry guardrails limit each microfinance borrower to three lenders. ¹¹ The JICA note's preferred indicators (debt-service burden, arrears, repeated refinancing) are closer to India's repayment-burden test than to a lender count, which it argues should not be treated as harmful in itself. In Thailand, the draft buy-now-pay-later rules define their cap of 15% a year (effective rate) as an effective rate that includes fees ¹², a design that addresses the fee channel identified in the IMF study.

Data gap: both the Indian test and the note's indicators depend on seeing a household's whole debt. Credit Bureau Cambodia sees formal loans reported weekly, but not informal borrowing, which is why the note proposes household surveys to complement bureau data.

Counterpoints and uncertainties

The note is a policy synthesis, not new data: its household-survey evidence comes from surveys conducted in 2019 and 2021 and the cited cap studies date from 2021 and 2023, so they may not describe lending in 2026. It gives no NPL or arrears figures, so it does not show whether larger loans led to more distress. One author works for the industry association and one is affiliated with the central bank, though the note states the views are the authors' own. The rise in informal borrowing it reports is described as small, and other factors over the same period may have contributed.