Working Paper

The Cambodian Debt Trap

The study explores the relationship between remittances and household debt in Cambodia. Common sentiment identifies remittances as a means of firstly alleviating, and eventually breaking, the poverty cycle through the direct increase of income. Whilst advocated by a large number of global and national development agencies, recent studies into the remittance-poverty nexus have identified a positive relationship between the former and debt: wherein debt itself is a constraint to escaping poverty. This paper employs the special regression approach to build upon the empirical methodologies present in comparable studies. The result aligns with these studies and identifies a positive and significant relationship between household received remittances and debt: thus confirming the research hypothesis that remittances incentivize migrant households to borrow more money.

About the Author

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LOR Samnang

LOR Samnang graduated with a dual bachelor's degree of Science in Economics and Management from Lumière University Lyon 2. He was a young and then junior research fellow at Future Forum in 2018 and 2019. He wrote an article on remittance and household debt; and was also the co-author of the Cambodia 2040 book chapter on Monetary Policy and Rielization. In 2020, he worked for the Ministry of Economy and Finance in the General Department of Policy before rejoining Future Forum as a coordinator of the project on microfinance. His research interests are broader macroeconomics, social issues, microfinance, and wellbeing.