In the last decade, Cambodia’s banking sector has been growing sharply because the operation of commercial banks in Cambodia has gotten the public confidence. People got started to deposit their money at bank rather than keep it at home. The public confidence in the banking sector and financial system is reflected through the increase in deposits, credit and total assets of the banking sectors.

The global financial crisis since October of last year, also plagued Cambodia’s economy such as tourism sector, garment industry, construction sector and real estate as well as Cambodia’s commercial bank sector. Even though, Cambodia’s commercial banks cushioned from the global economic slowdown, because Cambodia’s banking sector is not strongly dependent on international loans and capital market and Cambodia has yet to establish its own stock market.

Speaking at a roundtable discussion on banks and public confidence, which was organized by the Club of Cambodian Journalists on August 26, 2009, Tal Nay Im, National Bank of Cambodia’s Director General said that the bank deposits had increased to almost 29 percent of gross domestic products (GDP) in 2008, up from 14 percent in 2000.

Tal Nay Im also said that Cambodian banking system did not directly suffer from the consequences of the financial crisis, even if Cambodia’s economy is free and open to the world.

While the growth in bank deposits gives banks more liquidity, banks will be able to make more loans to aid the economy. At the mean time, commercial banks also carefully lend loans to bank’s clients because the slow recovery of nation economy makes customers to be facing difficulty for loan repayment on times.

Due to the time of economic turmoil, Cambodians keep their money at home rather than deposit at banks.

The Cambodia Daily quoted Kang Chandararot, executive director of the Cambodian Institute of Development Study as saying that there is no guarantee that the deposits will spawn economic growth, but growth needs the confidence that the deposits represent.

“You have to establish the confidence first before the market can function,” he said, adding that “at this moment it is encouraging, not guarantee.”

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