Cambodian Dollarization : : Its Policy Implications for LDCs' Financial Development.

• Author: Okuda, Hidenobu.
• TeilnehmendeR: Chea, Serey.
• Place / Publishing House: Milton : : Taylor & Francis Group,, 2023.; ©2024.
• Year of Publication: 2023
• Edition: 1st ed.
• Language: English
• Physical Description: 1 online resource (245 pages)

This book is the first study to provide a comprehensive picture of the reality and structure of dollarization in Cambodia, which has been achieving rapid economic and financial development since the 2000s. It uses data collected through nationwide surveys conducted by the National Bank of Cambodia and JICA Ogata Sadako Research Institute.

Table of Contents

Cover -- Half Title -- Title Page -- Copyright Page -- Table of Contents -- Foreword -- Acknowledgments -- List of Figures and Tables -- Editors and Contributors -- Introduction -- I.1 The Dollarization of the Cambodian Economy -- I.2 NBC-JICA Joint Research -- I.3 Structure of This Book -- Toward the Next Stage of Research -- Notes -- References -- 1 Development and Structure of Dollarization in Cambodia -- 1.1 Introduction -- 1.2 The Historical Development of Dollarization: Three Phases of Dollarization -- 1.2.1 Phase 1: After the Collapse of the Pol Pot Regime in 1979 -- 1.2.2 Phase 2: After the Signing of the Paris Peace Accords -- 1.2.3 Phase 3: Since the 2000s -- 1.3 Macroeconomic Structure and Dollarization -- 1.3.1 Economic Growth -- Sectoral Growth With Structural Change -- Demand Side of Growth -- Supply-side Factors Enhancing Economic Growth -- Labor Force Abundance and Improvement in Human Capital -- Foreign Aid and FDI as a Major Source of Physical Capital Accumulation -- Productivity From Governance and Institutional Quality Perspectives -- 1.3.2 Poverty and Inequality -- 1.3.3 The Financial and Monetary Side -- External Financial Balance -- Money Supply of Dollars -- Demand for Money in Dollars -- 1.4 Limitations On the Sustainability of Dollarization -- 1.4.1 Further Economic Growth -- 1.4.2 Pros and Cons of High Dollarization -- 1.4.3 Concerns About Further Dollarization -- Notes -- References -- 2 Dollarization in Households -- 2.1 Introduction -- 2.2 Theory of Foreign Currency Use By Households -- 2.2.1 Search Model and Network Externalities -- 2.2.2 Convenience (Transaction Cost) -- 2.2.3 Risks and Returns On the Currency (Portfolio Selection) -- 2.3 Dollarization and Households in Cambodia -- 2.3.1 Use of Foreign Currency in Daily Transactions -- 2.3.2 Preference for Currency By Size of Transaction.

2.3.3 Dollarization in Household Debts and Savings -- 2.4 Progress in Local Currency Promotion -- 2.5 Conclusions -- Acknowledgment -- Notes -- References -- Appendix 2.1: Description of the NBC-JICA Survey 2017 -- 3 Enterprise and Dollarization -- 3.1 Introduction -- 3.2 Dollarization in Enterprises -- 3.2.1 Difference By Regions -- 3.2.2 Difference By Sectors -- 3.2.3 Differences By Size of Enterprise -- 3.3 Determinants of Wage Payment in Foreign Currencies -- 3.4 The Borrowing Behavior of Cambodian Enterprises -- 3.5 Conclusion -- Notes -- References -- Appendix 3.1: Design and Data Description of the NBC-JICA Survey 2017 -- Survey Design -- Data Description -- 4 Dollarization and Financial Institutions -- 4.1 Introduction -- 4.2 Literature Review On the Role of Financial Institutions and Dollarization -- 4.2.1 The Role of Financial Institutions in Dollarization -- 4.2.2 The Case of Cambodia -- 4.2.3 Overview of the Cambodian Banking Sector -- 4.3 The NBC's Policies to Promote KHR -- 4.3.1 NBC Policy Promotion of KHR in the 1990s -- 4.3.2 NBC Policy of Promotion of KHR in the 2000s -- 4.3.3 NBC Policy of Promotion of KHR Since 2010 -- 4.4 Dollarization in Cambodian Financial Institutions -- 4.4.1 Trends in Recent Dollarization in Cambodia -- 4.4.2 Analysis of the Branch-Level Data of Financial Institutions -- 4.4.3 Analysis of Cash Transfers -- 4.5 Conclusion and Policy Implications -- 4.5.1 Further Development of the KHR Loan Market Is Urgent -- 4.5.2 Develop a Database to Measure Dollarization at Branch Level -- 4.5.3 Supporting Measures Are Needed for MFIs to Collect KHR Deposits -- Notes -- References -- Appendix 4.1: Historical Table of NBC Policy Relating to Dollarization -- 5 Currency Exchange Under Payments Dollarization -- 5.1 Introduction -- 5.2 Money Changers in a Dollarized Economy.

5.2.1 Payments Dollarization and Currency Exchange in Cambodia -- 5.2.2 Banks and Money Changers in the Currency Exchange Business -- 5.2.3 Money Changers and Central Bank Auctions -- 5.2.4 Firms' Payment Methods in Cambodia -- 5.3 Related Literature -- 5.4 Data and Methodology -- 5.4.1 Data -- Currency Mismatch -- Methods of Currency Exchange -- Methods of Payments -- Criteria for Selection of Currency Exchange Methods -- 5.4.2 Analytical Framework -- 5.5 Empirical Results and Discussion -- 5.5.1 Results -- 5.5.2 Discussion -- 5.6 Conclusion -- Notes -- Acknowledgment -- References -- Appendix 5.1: Results of the Bivariate Probit Model -- Appendix 5.2: Effects of Firms' Perceptions On the Probability of Selecting Money Changers -- 6 Electronic Payment and Promotion of Local Currency -- 6.1 Overview of Cambodia's Payment Landscape -- 6.1.1 Evolution of Payments in Cambodia -- 6.1.2 Development of Legal and Regulatory Frameworks for Payment -- 6.1.3 Behavioral Change Toward Digital Payments -- 6.2 Dollarization in Digital Payments in Cambodia -- 6.2.1 Payment System Infrastructure -- 6.2.2 Payment Services -- 6.2.3 The Bakong Backbone Payment System Infrastructure -- 6.3 Digital Currency and Dollarization in Cambodia's Context -- 6.3.1 Digital Currency in Cambodia -- 6.3.2 The Bakong Payment System -- References -- 7 Dollarization in Other Emerging Economies and Developing Countries -- 7.1 Introduction -- 7.2 Conventional Arguments On Dollarization -- 7.2.1 Voluntary and Formal Dollarization -- 7.2.2 Dollarization in Post-Conflict Economies -- 7.2.3 Hyperinflation and Dollarization in Latin America -- 7.2.4 Fatalistic But Formal Dollarization -- 7.3 The International Economic Structure and Dollarization -- 7.3.1 Oil Exporters and Dollarization -- 7.3.2 Remittances as the Source of Dollar Inflows.

7.3.3 International Trade, Invoicing, and Dollarization -- 7.4 Financial Dollarization in the Highly Integrated International Market -- 7.4.1 Dollarization of Assets -- 7.4.2 Dollarization and Overseas Assets -- 7.4.3 Dollarization of Liability -- 7.5 Conclusion: Coping With Partial Dollarization -- References -- 8 Strategies for Promotion of Khmer Riel -- 8.1 Introduction -- 8.2 De-Dollarization Policies Until Recently -- 8.2.1 Enhance Confidence in the Riel -- 8.2.2 Promote Price Quotations and Payments of Goods and Services in Riel -- 8.2.3 Promote the Opening of Bank Accounts in Riel -- 8.2.4 Improve the Payment System and Financial Instruments in Riel -- 8.3 De-Dollarization Policy and Financial Market Development -- 8.3.1 Improve Foreign Exchange Markets -- 8.3.2 Further Developing Interbank and Money Markets -- 8.3.3 Further Develop Securities Markets -- 8.3.4 Broaden the Clearing House's Policy On Lowering the Riel Transaction Fee to Market Fund Transfer -- 8.4 New Elements for the Promotion of Khmer Riel -- 8.4.1 Promote Financial Intermediation in Riel On a Gradual Basis -- 8.4.2 Fiscal Support for the Riel -- 8.4.3 Promote Public Awareness and Participation -- 8.4.4 Enhance Cooperation for the Implementation of Effective Measures -- 8.5 Effectiveness of Promoting the Policy and Its Limitations -- 8.5.1 Stronger Yet Still Limited Confidence -- 8.5.2 Difficulty in Changing People's Mindset -- 8.5.3 Network Externality -- 8.5.4 Lack of Demand-Side Policies -- 8.5.5 Limited Domestic Production -- 8.5.6 Limited Coordination Between Implementing Agencies -- 8.6 Conclusion -- Notes -- References -- Index.