Cambodia is a bank-based economy. Commercial banks are the primary source of funding. The Cambodian banking system is a two-tier system comprising the Central Bank (National Bank of Cambodia), and private sectors such as commercial banks, specialized banks, microfinance institutions, and a number of NGOs involved in rural credit activities.
The key players in Cambodia’s banking sector are NBC, 43 commercial banks, 14 specialized banks including one state bank, 5 Representative office of foreign commercial banks, 74 microfinance institutions where 7 are eligible to collect customer deposits, and 15 financial leasing companies. As of December 2018, there were 151 financial institutions operating in Cambodia. By December 2017, the financial institutions reported an outstanding loan balance of $16.127 billion with the number of borrowers of 2.589 million.
Recent liberal investment regime and open market trade policies have gathered momentum for Cambodia's economic prospects and banks are also enjoying benefits from such strong growth opportunities. The Cambodian banking sector has been improving and growing steadily over the past two decades; yet; it still lacks of financial depth and is being fragmented. To gain more international confidence, significant progresses are necessitated to address structural distortions such as inadequate legal framework for secured transactions, and information asymmetry arising from poor disclosure standards.