PurposeThe purpose of this paper is to examine the extent to which individual risk attitude determines a Cambodian smallholder's choice between a commercial informal loan and a credit from a licensed microfinance institution.Design/methodology/approachThe paper analyzes a sample of smallholder farmers in the Ratanakiri province in northeastern Cambodia, a country with a long history of microfinance and a saturated microcredit market. Employing a binary and a multinomial logit model, this paper assesses the effect of individual risk attitude on the choice of a financial instrument.FindingsThe results reveal a statistically significant relationship between the choice of a credit source and an individual's risk attitude: On average (c.p.) the less risk averse the smallholder is, the more they tend to prefer an unlicensed commercial lender.Practical implicationsThe findings suggest that less risk-averse individuals tend to take up riskier and generally more expensive informal loans. Measures to increase the safe access to financial services for less risk-averse borrowers as well as improvements in financial literacy should be undertaken to protect smallholders from taking risky choices.Originality/valueAlthough existing studies have examined the importance of risk attitudes between credit provider and borrower, they focus mainly on the lender's perspective. This paper provides new insights on how risk attitude influences the borrower's choice in Cambodia. Thus, this study is relevant for policymakers in countries with oversaturated microcredit markets and a high prevalence of informal lenders.

Despite numerous policy interventions, poverty still exists. Those most harshly affected are people living in rural areas of low-income countries, regions that are often characterized by information asymmetries leading to market failure. The widespread growth of information and communications technologies (ICTs) in remote areas across the world holds immense potential for lifting the information barriers of the rural poor. However, there is little evidence of the effectiveness of delivery channels, which might be one reason why digital advice differs in its impact. Seeking to ascertain how smallholders can best be served by ICT, the authors investigated information needs and effective ICT delivery channels. Sociodemographic and ICT-related data was collected and a framed field experiment was conducted with smallholders in Cambodia; they were asked to build an object while using various delivery channels for instruction. Employing different regression techniques and matching algorithms, the experiment reveals that multisensory instructions trump all others.

Despite manifold policy interventions, poverty still exists. Those most harshly affected are people living in rural areas of low-income countries. A seminal strand in the literature presents a promising avenue for analyzing the lives of the poor by suggesting that poverty impedes cognitive function. However, the real-world consequences of impeded cognitive function are yet to be discovered. We ask whether the level of cognitive function can help to explain the differences in economic performance of the poor. We conducted a field study in rural Cambodia using the well-established Raven's Progressive Matrix to elicit cognitive function. Employing stochastic frontier analysis, we find that the level of cognitive function of poor smallholder farmers helps in explaining differences in economic performance. Our findings suggest that impeded cognitive function results in a negative economic performance feedback loop, which can be a reason why some farmers appear to be stuck in poverty while others manage to escape it.

Roughly one-fifth of the global population is affected by poor visual acuity. Despite the fact that inhabitants of rural areas in low-income countries are most distressed by this, no prior research has studied the impact of poor visual acuity on the economic performance of farms. We conduct a standardized eye test with 288 farm managers in rural Cambodia and find that around 30 percent of our sample suffers from poor visual acuity in terms of nearsightedness (myopia). Our analyses indicate a statistically significant and economically meaningful association of poor visual acuity with economic farm performance. Our results show that gross margins for cropping activities per year could be, on average, around 630 USD higher if farm managers were able to correct for poor vision. Our results suggest that poor visual acuity impairs farm managers from tapping the full potential of their business, which in turn decreases their chance to break the vicious cycle of poverty.

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