Key Findings on Financial Inclusion in Cambodia From the Baseline Report: Impact Evaluation of the Cambodia Family Package Programme April 2025 Table of contents Background of the study Executive Summary Definition Key Findings on Financial Inclusion 1. Savings Behavior 2. Borrowing Patterns 3. Mobile Financial Services 4. Insurance and Risk Coping Policy implication Annex 2 Background of the study Objective: To establish baseline conditions for evaluating the impact of the Cambodia Family Package Programme on poor and vulnerable households. Commissioned by: UNICEF, with donor support. Target Audience: Policymakers, donors, financial service providers (FSPs). Purpose of the Findings • Identify priority gaps for intervention • Inform Cambodia’s National Financial Inclusion Strategy (NFIS) • Guide future policy and programming 3 How We Define and Segment: Key Terms and Groups Currency Unit = Khmer Riel (KHR) US$ 1 = KHR 4,106.44 (data collection period average May-June 2024) Education Level: The highest level of education completed by any household member. • Group 1: Pre-school – None completed, Pre-school 1~3 • Group 2: Grade 1~6 • Group 3: Grade 7~9 • Group 4: Grade 10~12 • Group 5: TEVT, Univ – Technical Vocational/Education Training (TVET), University/Institute, Other • Group 6: Unknown – Don’t know Job Group: The main source of income among all income sources earned by the household in the past 12 months. • Group 1: Agriculture, animal breeding, fishing • Group 2: Family business (other than agriculture) • Group 3: Government wage and salary • Group 4: Private sector wage and salary • Group 5: Transfers and social assistance • Group 6: Other source Significance level: * 10%, ** 5%, *** 1% 4 Executive Summary Savings: Only 7% of households save; 75% of them keep money at home. Key opportunity Credit: Informal borrowing dominates; 36% borrow from social networks, only 17% from banks. • Expanding access to formal and digital financial Digital Access: 88% own a mobile phone, services, but just 17% use mobile money or bank accounts. • Strengthening consumer protection Insurance: Virtually absent; only 1% report having any • Targeting outreach to the form of insurance. most excluded groups is essential for building Coping Mechanisms: Most rely on social networks; resilience and reducing few use formal services for emergencies. poverty in Cambodia. Female-headed households are especially underserved. 5 Key Findings on Financial Inclusion 1. Savings Behavior 2. Borrowing Patterns 3. Mobile Financial Services 4. Insurance and Risk Coping Why Savings Matter: Building Security and Opportunity for Cambodian Families Why We Care About Savings • Savings are the cornerstone of financial security-especially for Cambodia’s low- income and rural households. • They help families cope with emergencies, invest in education or businesses, and avoid falling into debt. • Understanding where and how Cambodians save highlights barriers to financial inclusion and guides effective policy and program responses. This section explores: • Where Cambodian families keep their savings • Who is most likely to save formally or informally • What this means for resilience and opportunity 7 Most Households Save at Home — Few Use Banks Only 7% of households report any savings, with 75% keeping money at home. Very few use banks or MFIs. This heavy reliance on informal saving exposes families to risk and limits asset growth However, the amount saved at banks are higher than that of others Household has saving Place of savings 80 75 3.0 Yes, 7.1% 2.5 60 2.0 40 1.5 1.0 20 13 8 0.5 1 3 - - No, Bank MFI At home Tong tin Others 92.9% pot Ratio (%, LHS) Amount (million KHR, RHS) 8 * Multiple answers allowed Women-Headed Households Save Less Formally Formal savings: 11% for men-headed, 4% for women-headed households. Women-headed households save larger amounts when using formal channels. Share of household with savings Average amount of savings 96 3.0 100 Millions KHR 91 89 2.6 Percent 2.5 2.3 2.2 80 2.0 60 1.5 40 1.0 0.8 0.7 0.8 20 9 11 0.5 4 0 - Formal saving Informal saving Formal saving Informal saving Overall Female-headed Male-headed Overall Female-headed Male-headed 9 * Multiple answers allowed Rural and Urban Differences in Formal Savings No significant difference in total savings, but rural households have higher formal savings. Urban poor may need more support to access formal options. Share of household with savings Average amount of savings 100 91 91 92 3.0 Millions KHR Percent 2.5 2.4 80 2.3 2.0 60 1.5 1.4 40 1.0 0.8 0.8 0.7 20 0.5 9 9 8 - - Formal saving Informal saving Formal saving Informal saving Overall Rural Urban Overall Rural Urban 10 * Multiple answers allowed Education and Income Source Shape Savings Higher education correlates with higher savings. Households relying on transfers have the largest savings amounts. Average household saving amount Average household saving amount by education level by income source group 3.0 3.0 Millions KHR Millions KHR 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 - Pre-school Grade 1-6 Grade 7-9 Grade 10- TVET, Univ. Agriculture Family Public Private Transfers 12 business sector sector 11 Summary: Savings as Pathway to Financial Security Problem: Heavy Risk: Lack of reliance on consumer Only 7% of households save; 75% informal saving, protection, exposing missed keep savings at home, just 8% in households to opportunities for banks. theft/loss. asset growth. Average savings in banks (USD 589) are over three times higher than at Opportunity: What Needs to home (USD 188). Expand formal Change: Build Female-headed and urban savings products, trust in formal households save less and are less especially institutions, digital/mobile financial literacy, likely to use formal institutions. options. agent networks. 12 Key Findings on Financial Inclusion 1. Savings Behavior 2. Borrowing Patterns 3. Mobile Financial Services 4. Insurance and Risk Coping Why Borrowing Patterns Matter: Debt, Risk, and Opportunity Why We Care About Borrowing • Credit shapes household resilience and opportunity-for many Cambodians, borrowing is essential for managing daily needs, emergencies, and investing in the future. • The way people borrow-whether from banks, MFIs, or informal lenders-reveals who is included or excluded from safe, affordable financial services. • Understanding borrowing patterns helps policymakers and partners address risks like over-indebtedness, predatory lending, and financial exclusion. This section explores: • Where Cambodian families access credit • Who relies on formal vs. informal loans • What borrowing patterns mean for financial health and inclusion 14 Most borrowing is informal 36% of loans from social networks; only 17% from banks, 23% from MFIs. Formal loans are larger (USD 1,600) vs. informal (USD 216). Source of borrowing 40 36 6,000 Share (%, LHS) 5,000 30 Amount (USD, RHS) 23 4,000 21 20 17 3,000 2,000 10 3 1,000 0 - Bank MFI Social network Informal money Other lender Formal lending Informal lending 15 * Multiple answers allowed Female-Headed Households Borrow Formally in Larger Amounts Female-headed households use formal loans more (46%) than male-headed (41%). Female-headed households borrow larger amounts from formal lenders (USD 4,988) than male-headed (USD 3,010). Informal loan amounts are small for both. Share of household with borrowing Amount of borrowing per household 80 6,000 Percent USD 4,988 58 59 5,000 60 54 46 4,000 3,598 42 41 3,010 40 3,000 2,000 20 1,000 356 405 338 - - Formal loan Informal loan Formal loan Informal loan Overall Female-headed Male-headed Overall Female-headed Male-headed 16 * Multiple answers allowed Urban Households Borrow More Informally and in Larger Amounts More urban households use informal loans (63%) than rural (57%). Rural households use formal loans slightly more (43%) than urban (37%). Urban households borrow larger amounts from formal lenders (USD 5,028) than rural (USD 3,316). Informal loan amounts are small for all groups. Share of household with borrowing Amount of borrowing per household 70 63 6,000 58 5,028 Percent 60 57 USD 5,000 50 42 43 3,598 3,316 4,000 40 37 3,000 30 2,000 20 10 1,000 356 368 309 - - Formal loan Informal loan Formal loan Informal loan Overall Rural Urban Overall Rural Urban 17 Borrowing is driven by necessity, not investment Most households borrow to pay for food (24%) and health expenses (18%), not for business or investment. Borrowed amounts are generally small. The largest loan amounts are for home repairs and buying assets. Purpose of outstanding loans, share and amount 30 4,000 25 3,000 20 15 2,000 10 1,000 5 0 - 18 Share (%, LHS) Amount (USD, RHS) Higher Education Linked to Formal Borrowing Households with higher education use banks more for loans. Government wage earners have the highest bank loan usage (37%). Source of loans by education level Source of loans by income source group 100 100 Percent Percent 13 14 21 22 19 28 26 22 26 80 13 80 31 60 60 51 26 32 24 34 38 43 33 37 15 40 40 5 21 31 38 26 21 16 20 19 20 20 40 37 24 18 15 16 16 19 14 8 - - Agriculture Family Public Private Transfers Pre-school Grade 1-6 Grade 7-9 Grade 10- TVET, Univ. business sector sector 12 Bank MFI Bank MFI Soial networks Informal money lender Soial networks Informal money lender Tong tin pot Tong tin pot 19 Loan Repayment Struggles 21% of households with loans missed a payment in the past year. Delinquency is higher among men-headed and rural households. Female- headed, Household with loan delinquency 33% within 12 months Male- headed, 67% No, 21% Yes, 79% Urban, 24% Rural, 76% 20 Higher Loan Repayment in Urban and Male-Headed Households The average spending for bank payback, other financial service or tongtin in the last 12 months of the full sample was USD 573. Payback amount was higher for the man-headed households and urban households. Payback amount by household, Gender Payback amount by household, Rural/Urban Millions KHR 8 8 7.3 Millions KHR 6 5.4 6 4.9 4.7 4 4 2 2 - - Female-headed Male-headed Rural Urban 21 Education and Job Group Influence Delinquency Higher education linked to lower delinquency with higher repayment. Private sector wage earners have slightly higher delinquency (27%), but with the high repayments. Household payback, by education level Household payback, by income source group 30 8 30 8 6 6 20 20 4 4 10 10 2 2 - - - - Has missed repayment (%, LHS) Has missed repayment (%, LHS) 22 Amount (million KHR, RHS) Amount (million KHR, RHS) Summary: Expanding Access — From Informal Loans to Formal Finance Informal Lending Dominates- Problem: Heavy Formal Credit Remains Limited Risk: Debt traps, informal borrowing, lack of consumer 36% of loans from friends/relatives; especially for basic protection. needs. only 17% from banks, 23% from MFIs. Formal loans are larger (avg. USD 1,600) vs. informal (USD 216). What Needs to 21% of households with loans Change: Consumer Opportunity: education, expand missed a payment in the past year. Mobile credit formal credit scoring, tailored Households borrow mainly for food options, strengthen microloans. regulation of (24%) and healthcare (18%), not for informal lenders. investment. 23 Key Findings on Financial Inclusion 1. Savings Behavior 2. Borrowing Patterns 3. Mobile Financial Services 4. Insurance and Risk Coping Mobile Finance: Bridging the Inclusion Gap Why We Care About Mobile Finance • Mobile phones are nearly universal in Cambodia, but use of mobile banking and digital wallets remains low-especially outside urban areas. • Mobile financial services can bridge the gap for rural and underserved populations, offering safer, more convenient ways to save, send, and receive money. • Expanding digital finance is key to achieving national financial inclusion goals and supporting economic growth. This section explores: • Who uses mobile financial services-and who is left out • Barriers to adoption in rural and vulnerable communities • Opportunities to leverage mobile technology for broader inclusion 25 Mobile phones are everywhere, but digital finance isn’t 88% of household has mobile phone, but only 17% has anyone in your household have an account at a bank, with a mobile money service provider or other financial institutions Has an account with a mobile money Household with a mobile phone service provider Don't No, 12% know, 0% Yes, 17% Yes, 88% No, 83% 26 Gender and Rural Gaps in Digital Finance Uptake The gap between mobile phone and mobile account ownership is larger for women-headed and rural households. Household mobile phone and account Household mobile phone and account ownership, by gender ownership, by region 100 100 Percent Percent 80 80 60 60 85 90 87 92 40 40 20 20 35 15 19 13 - - Mobile phone Mobile account Mobile phone Mobile account ownership ownership ownership ownership Female-headed Male-headed Rural Urban 27 Education and Job Group Influence Digital Finance Use Education narrows the gap between phone ownership and account usage. The gap is largest in agriculture, smallest in the public sector. 100 88 90 90 89 100 92 89 87 Percent Percent 80 71 78 79 68 80 60 59 60 40 33 40 18 24 22 20 11 20 - 7 7 - - Mobile phone ownership Mobile phone ownership 28 Mobile account ownership Mobile account ownership Summary: Turning High Mobile Ownership into Financial Opportunity Problem: Low Risk: Exclusion uptake of mobile from digital financial services payments, High Mobile Phone Ownership, Low despite high remittances, and phone Financial Service Uptake savings. penetration. 88% of households own a mobile phone, but only 17% have a bank or mobile money account. What Needs to Change: Expand Digital financial inclusion lags, Opportunity: agent networks, especially in rural and women- Digital ID, e-KYC, digital literacy, headed households. agent banking. address barriers for women and rural poor. 29 Key Findings on Financial Inclusion 1. Savings Behavior 2. Borrowing Patterns 3. Mobile Financial Services 4. Insurance and Risk Coping Insurance and Risk Coping in Cambodia Why it matters • Insurance is a critical safety net-protecting families, farmers, and businesses from shocks like illness, accidents, and natural disasters. • Coverage remains extremely low: Despite rapid market growth, only about 1% of Cambodians are insured, leaving most-especially rural and low-income households-vulnerable. • Without insurance, households cope by selling assets or taking on high-interest debt, deepening cycles of poverty. • New opportunities are emerging: Microinsurance, digital platforms, and innovative partnerships are beginning to reach underserved groups. This section explores: • Who has insurance and who is left behind • Barriers to coverage • Innovations and opportunities to strengthen financial protection 31 Insurance Coverage is Nearly Absent Only 1% of households report any insurance coverage. Average household spending on health and travel insurance is minimal. Out of 2,402 sample households of the study… No. households Amount (KHR) Amount (USD) Health Paid 19 2,588 0.63 insurance Received 4 294 0.07 Car and travel Paid 4 562 0.13 insurance Received 1 42 0.01 Only 28 households had access to insurance. And the amount is very minimal. 32 * Multiple answers allowed Most Households Lack Formal Coping Strategies 30% have no coping strategy. Borrowing is the fifth most preferred option (9.4%), government aid (9.1%), spending savings (1.1%). No strategy 30% Stop sale live 29% Changed consumption habits 23% Do small jobs 14% Obtaining credit 9% Government/State aid 9% Help from relatives/friends 8% Sold livestock 5% Reduce spending on health or education 4% Send children for paid employment 3% Sold household assets 1% * Multiple answers allowed Spend savings 1% 33 Families Rely on Social Networks in Emergencies 89% rely on family, friends, or relatives in emergencies. 11% used savings, 43% borrowed money in the last 30 days for essential needs. Are you able to rely on any family, friends, and relatives? Have you spent savings due to a lack of resources to access essential needs? Yes – 89% No, I didn’t need to – 46% No – 11% No, because I couldn’t – 1% Have you borrowed money to access Yes – 11% essential needs? Yes – 43% No, I didn’t need to – 34% No, because I couldn’t – 2% 34 Summary: Building Resilience — Opportunities in Insurance and Risk Coping Insurance Is Nearly Absent- Problem: Risk: Vulnerability Households Rely on Informal Households lack to shocks, health Networks formal risk emergencies, and protection. debt cycles. Only 1% report any insurance coverage. 30% of households have no coping What Needs to strategy; 43% borrowed money in Change: Promote the last 30 days to meet essential Opportunity: affordable needs. Microinsurance, insurance, government- integrate with Family/friends are the main safety backed schemes. social assistance, net (89% rely on them in educate on risk emergencies). management. 35 Policy Implication What Does This Mean for Cambodia’s Financial Inclusion Strategy? Summary of Key Findings: Financial Inclusion Gaps Savings remain informal: Only 7% of households save, with 75% keeping cash at home and just 8% using banks. Women-headed and urban households save less formally. Borrowing is driven by necessity and informality: 36% of loans come from friends or relatives; only 17% from banks and 23% from MFIs. Most loans are for food and healthcare, not investment. 21% of households with loans missed a payment in the past year. Mobile phone ownership is high, digital finance uptake is low: 88% of households own a mobile phone, but only 17% have a bank or mobile money account. Gaps are widest for rural and women-headed households. Insurance coverage is nearly absent: Only 1% of households have any insurance. Most families rely on informal networks or borrowing in emergencies. 37 Opportunities for Action: Advancing Financial Inclusion Expand formal and digital financial services: Promote accessible savings, credit, and insurance products, especially for rural, low-income, and women-headed households. Promote financial and digital literacy: Equip households with knowledge and skills to use formal and digital financial services safely and effectively. Strengthen consumer protection: Build trust in formal institutions and safeguard against predatory lending and informal risks. Target outreach to the most excluded: Prioritize interventions for groups with the lowest access-rural, female-headed, and the poorest households. Leverage mobile technology: Use Cambodia’s high mobile phone penetration to deliver innovative digital financial solutions and reach underserved communities. Closing the gaps in formal savings, credit, digital finance, and insurance is essential for building resilience and reducing poverty among Cambodia’s most vulnerable families. 38 Annex Supplementary Tables on difference-in-difference analysis Place of savings The treatment and comparison groups appear balanced in terms of ratio variables. However, for saving amounts, the groups are balanced only with respect to savings kept at home and in banks. Place of savings N Overall Treatment Comparison Adjusted P value mean mean mean difference Share (%) Home 128 0.753 0.753 0.753 0.045 0.681 Banks 14 0.082 0.086 0.079 -0.015 0.827 MFIs 1 0.012 0.012 0.011 0.012 0.660 Tongtin Pot 5 0.029 0.049 0.011 -0.028 0.497 Other 22 0.129 0.099 0.157 -0.031 0.709 Amount Home 128 772,156 723,279 816,657 -247,742 0.572 (KHR) Banks 14 2,417,143 2,491,429 2,342,857 3,289,232 0.329 MFIs 1 45,000 0 45,000 0 nan Tongtin Pot 5 1,756,000 1,645,000 2,200,000 1,886,875 nan Other 22 439,909 503,000 403,857 589,849* 0.090 Total 894,550 902,050 887,809 -35,150 0.924 N 40 170 81 89 Source of lending The treatment and comparison groups appear to be balanced only for variables on home and banks. Source of loan Overall Treatment Comparison mean Adjusted P value mean mean difference Bank 0.171 0.185 0.158 0.036 0.436 MFI 0.231 0.209 0.253 -0.101 0.053 Friends/relative/neighbor 0.361 0.370 0.353 0.013 0.822 Informal money lender 0.211 0.204 0.218 0.028 0.588 Other 0.025 0.032 0.018 0.024 0.217 N 753 373 380 * N is the number of loans, not household. 41 Loan delinquency The treatment and comparison groups appear to be balanced. Overall Treatment Comparison mean Adjusted P value mean mean difference Loan delinquency No 0.794 0.793 0.795 -0.033 0.539 Yes 0.206 0.207 0.205 0.033 0.539 N 626 319 307 42 Payback amount The treatment and comparison groups appear to be balanced. Overall Treatment Comparison Adjusted P value mean mean mean difference Payback amount (KHR) 2,351,519 2,315,061 2,387,615 426,909 0.186 N 2404 1196 1208 43 Access to mobile financial service The treatment and comparison groups appear to be balanced. Overall Treatment Comparison Adjusted P value mean mean mean difference Mobile phone ownership 0.878 0.868 0.888 -0.019 0.403 Mobile money account 0.173 0.156 0.190 -0.017 0.496 N 2404 1196 1208 44 Insurance coverage The treatment and comparison groups appear to be balanced, except for the health insurance paid. KHR N Overall Treatment Comparison Adjusted P value mean mean mean difference Health Paid 19 2,588 4,258 935 5,562* 0.085 insurance Received 4 294 236 352 433 0.480 Car and travel Paid 4 562 753 373 772 0.460 insurance Received 1 42 0 83 -158 0.262 * Multiple answers allowed 45 Coping strategies The treatment and comparison groups appear to be balanced in general. * Multiple answers allowed Overall mean Treatment mean Comparison mean Adjusted difference P value No strategy 0.303 0.309 0.296 0.037 0.151 Stop sale live 0.291 0.288 0.294 -0.025 0.332 Changed consumption habits 0.233 0.231 0.234 -0.013 0.597 Do small jobs 0.142 0.135 0.15 -0.045** 0.025 Obtaining credit 0.094 0.09 0.098 -0.025 0.146 Government/State aid 0.091 0.089 0.093 -0.015 0.362 Help from relatives/friends 0.079 0.073 0.085 -0.013 0.407 Sold livestock 0.054 0.06 0.048 0.019 0.137 Reduce spending on health or education 0.041 0.041 0.041 -0.015 0.187 Send children for paid employment 0.030 0.035 0.025 0.005 0.619 Sold household assets 0.014 0.013 0.016 0 0.983 Spend savings 0.011 0.009 0.013 -0.007 0.280 Sale of food stocks 0.009 0.011 0.006 0.012** 0.034 Growing market gardeners 0.009 0.007 0.012 -0.002 0.689 Taking children out of school 0.007 0.008 0.006 0.007 0.169 Sending children to live somewhere else 0.003 0.002 0.004 0 0.958 Assistance from religious organizations or NGOs 0.003 0.001 0.006 -0.003 0.351 Lease/pledge land 0.002 0.001 0.003 -0.006** 0.031 Fair trade 0 0 0.001 -0.001 0.396 Reduce unnecessary expenditure 0 0 0.001 0 0.638 46 Coping strategies The treatment and comparison groups appear balanced across all variables. Overall Treatment Comparison Adjusted P value mean mean mean difference Spent savings due to No, didn’t need to 0.460 0.477 0.445 -0.014 0.647 a lack of resources to No, can’t continue 0.009 0.005 0.013 -0.000 0.940 access essential needs Yes 0.106 0.102 0.109 -0.001 0.977 Borrowed money to No, didn’t need to 0.339 0.345 0.332 -0.039 0.173 access essential needs No, can’t continue 0.019 0.019 0.019 -0.000 0.985 Yes 0.432 0.422 0.441 -0.020 0.535 Able to rely on any No 0.107 0.108 0.107 -0.030 0.160 family, friends, and Yes 0.893 0.892 0.893 0.030 0.160 relatives N 2404 1196 1208 47