Financial Inclusion or Subordination? The Monetary Politics of Debt in Cambodia

Abstract

Financial inclusion is a leading driver of household debt across the global South. Although critical geographers have analysed this debt through the lens of financialisation, few have examined it in terms of monetary politics. This is a salient issue, because poorer nations often have limited control over their monetary policy due to their dependence on foreign currencies, which can adversely affect the structure of their financial markets. Building on the concept of monetary dependency from scholarship on financial subordination, I analyse the monetary politics of debt in Cambodia. Drawing on elite interviews and ethnographic research, I argue that Cambodia's extreme monetary dependence on the US dollar has shaped monetary and fiscal policies that compel poorer households to take on private debt to pay for their basic needs. This paper advances critical geographies of debt and development by studying financial subordination and its impact on financial inclusion in the global South.

Millions Owe Trillions

“…Debt is both a driver and result of poverty, and indebtedness is a subjectivity conditioned by the capitalist arithmetic of accumulation by dispossession (Green, 2023). Debt is both temporal and spatial.…”

Socioecological topologies of student debt in the United States

“…Rural students’ experience of debt manifests across uneven spatio-temporal scales. The global political economy of agricultural production is driving national ag-policy trends (Hall, 2013) (e.g. an increase in soybean production Hartman et al, 2016; Trauger, 2022), which, in turn, impacts small farmers across the US, as they go into more debt to compete with industrial-scale agricultural production (Giri and Subedi, 2023; Huffstuffer and Flowers, 2022).…”

Agrarian financial ecologies: Centring land and labour in geographies of debt

“…However, these microfinance NGOs quickly commercialised their operations to attract foreign investors and expand their loan portfolios. Meanwhile, the International Monetary Fund imposed monetary and fiscal reforms designed explicitly to promote a private banking industry and hasten the commercialisation of the microfinance industry (Green, 2023a). The mission drift from donor-funded, non-profit NGOs to commercial microfinance institutions (MFIs) was part of a larger trend within the industry, whose leaders argued that prioritising institutional management for financial sustainability rather social impact would enable microfinance to reach a wider population of poor and low-income households across the Global South (Mader & Sabrow, 2019).…”

“…In the past several years, nearly all of the largest MFIs and banks have been acquired by regional banks located in Japan, South Korea, Taiwan and Thailand. Despite this new ownership, these MFIs and banks continue to supplement shareholder equity with debt financing from development finance institutions and microfinance investment vehicles located primarily in Europe (Green, 2023a).…”

“…Following existing financial ecologies scholarship (DawnBurton, 2020;Harker, 2020;Tan, 2022), over-indebtedness in Baku and Sala can be partially explained by examining the terms and conditions of household credit-debt relations. In the past two decades, Cambodia has received a disproportionate amount of foreign equity and debt investment into the global microfinance industry (Green, 2023a). Owned by foreign shareholders and highly leveraged, MFIs and banks have a strong imperative to turn a profit in a highly saturated industry.…”