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Effect of Microfinance on Poverty and Welfare: New Evidence from 9 provinces in Cambodia

Dina Chhorn

Cahiers du GREThA from Groupe de Recherche en Economie Théorique et Appliquée(GREThA)

Abstract: The most recent studies at national level give emphasis to the failure of microfinance services in Cambodia since the bad practice is subordinate to high interest rate, non-productive loan, over-indebtedness, landless and migration. This paper examines the effect of microfinance, also putting weight on access to formal and productive loans, by using cross-sectional data in 2015 of 411 households, who are beneficiaries of the Agriculture Cooperative (AC) community supported by the World Vision, in 9 provinces of Cambodia. The binary choice model as well as bivariate and censoring model along with addressing the endogenous treatment effect were applied. The findings show that access to microfinance services in every aspect reduces poverty and promotes household’s welfare, proxied by per capita income, except there is insignificant effect on per capita economic assets and expenditure on child’s well-being after the Wald test of exogeneity and the Newey’s minimum chi-squared estimator with the twostep option were computed. However, these results must be interpreted with caution because the data is subject to specific sample selection.

Keywords: Microfinance; poverty; welfare; Cambodia (search for similar items in EconPapers)
JEL-codes: D33 D63 F16 F15 I24 I3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-mfd and nep-sea
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:grt:wpegrt:2018-12

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