Post Conflict Microfinance in Cambodia : Report Based on Qualitative Research

Publication Date: 2001
Published by: Post Conflict Microfinance Project
Document Type: Paper (PDF)

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Do informal, semi-formal, or formal microfinance develop more quickly after conflict?

The paper states that microfinance market will develop in different ways within a country in accordance with the different rates of transition from high to low intensity conflict, relief and rehabilitation to development. However, informal microfinance appears to develop much more quickly after conflict than semi-formal or formal microfinance. Using data gathered from 13 June to 4 August 2001 in Cambodia.

Paper examines post conflict microfinance and highlights a number of issues to consider in better practice. Specifically, it provides answers to the following questions:

• what environmental conditions have the greatest impact on microfinance?
• what are the coping mechanisms of the poor for managing household finances during and in post-conflict situations?
• what types of microfinance products are in demand in post-conflict situations?

• given functioning markets, trust is essential for informal microfinance to develop and security is essential for semi-formal and formal microfinance to develop
• although formal and semi-formal microfinance provision is likely to be very high cost during and after armed conflict, it is still important in generating competition and a functioning microfinance market
• the household asset base determines how households cope during and after conflict
• successful productive activities depend upon market demand
• low investment, quick return activities are important for people during and immediately after conflict
• people prefer informal microfinance products as they are more tailored to their needs than semi-formal and formal products
• characteristics of microfinance products demanded by households change with the conflict and post-conflict environment