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Logo of Phnom Penh Post newspaper Phnom Penh Post - Financial illiteracy persists as banks blossom

A man uses an Acleda Bank ATM.
A man uses an Acleda Bank ATM. Hong Menea

Financial illiteracy persists as banks blossom

Most Cambodians continue to have low financial literacy even as an increasing number of them are beginning to embrace the formal banking sector, according to a recent Standard & Poor’s report.

The international credit rating firm’s Global FinLit Survey showed that only 18 per cent of Cambodians were able to answer three of four questions related to basic financial literacy, placing the Kingdom at 135 out of 144 surveyed nations.

While around 40 per cent of respondents in Cambodia were able to answer questions related to the calculation of simple and compound interest, which is used to understand the terms of a loan agreement, only 21 per cent were able to answer a question on diversification of investments.


Grant Knuckey, CEO of ANZ Royal Bank, said it was critical for people to make good decisions with their money, which would in turn improve the sustainability of the Cambodian economy.

“Financial literacy is certainly an issue for the country, including the minority who already has a bank account,” he said.

Knuckey added that financial sector played a role in “lifting knowledge”, and that ANZ royal had programs to improve financial literacy aimed at Cambodians who did not have access to correct information or were susceptible to “less-reputable lenders”.

The responsibility of improving people’s knowledge about basic banking, particularly for farmers, was the collective responsibility of the government, private sector and education institutions, said Um Vuthdara, professor of business and economics at Pannasastra University of Cambodia.

“They need to provide education so that when they give loans to farmers, the farmers can pay it back on time,” he said.

Vuthdara added that, as the economy grows, the government should set up bodies on the local level to ensure that increasing financial inclusion also included enhancing people’s financial literacy.

While the percentage of Cambodians with basic knowledge about finances was still low, Joe Farrugia, CEO of Hong Leong bank, said it was likely double what it was just a few years ago.

“In a developing market with less than around 10 per cent [of people] that are bankable, financial literacy is a challenge and will continue to be,” he said.

“However, the younger, emerging and affluent clients are coming through and really starting to understand the mathematics of what is important to their financial future.”

According to Farrugia, while earlier on the onus was on the banker to explain the options available to a customer, who didn’t know which was the best one, nowadays, customers are more aware of their options and even ask appropriate questions to make an informed decision.

“They are not so heavily reliant on the banker today as there were seven or eight years ago,” he added.

The core of Cambodia’s banking sector comprises 36 commercial banks, 11 specialised banks and over 40 microfinance institutions. Many other organisations also provide banking and financial services.

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