BUSINESS RECOVERY PATHWAYS FROM FINANCIAL INSTITUTIONS PERSEPCTIVE AND BANK NIGHT

The COVID-19 pandemic has rapidly evolved from a health emergency to a global economic crisis, spreading throughout sectors and posing growing risks to financial systems. Discretionary consumption and service-related sectors such as leisure and hospitality, travel, logistics, and meetings and conferences have experienced a sharp fall in demand. Companies dependent on global supply chains in the automotive, electronics, agribusiness, and textile industries face significant disruptions to their operations. In the financial sector, banks and microfinance institutions are already affected by a liquidity crunch and are expected to report an increase in nonperforming loans. Companies in the manufacturing and construction industries continue to face shutdowns and scaled-back operations. The global economy has acutely felt the impact of massive layoffs, furloughs, and reduced compensation. Therefore, YEAC decided to take action and, now one and a half years in the crisis, throw the current situation of MSMEs and Entrepreneurs on the table, up for discussion.
COVID-19 seriously affected the Micro, Small and Medium Enterprises (MSMEs) all around the worlds, among others; Cambodian MSMEs also have been facing the financial crisis and debt that cause to stop company operation or delay their activities. Based on Convid-19 Briefing note on the early impacts on Cambodian MSMEs by YEAC 2020; reported that 91% of MSMEs facing Financial Impact included cash flow problems and inability to repay or renegotiate debt financing obligation.
Women’s economic participation in MSMEs, in general, is high (61 percent) but for the majority of women-owned MSMEs started their business from scratch using their own funds or rely on informal sources and savings to expand their businesses. only 3% of the nation’s women entrepreneurs have access to formal credit. They have no other choice, as women are underserved by banks. The main barriers of women in seeking for financial support include lack of collateral, high cost of funding, and financial conditions1.
In this chapter, we will discuss how financial institutions take a central position in the economic recovery and how governments and investors can support the solvency of financial institutions and help create the conditions for them to play their central role in the economic recovery, accelerating the pathway to recovery for the other chapters and sectors. Particularly in Cambodia, financial institutions play a vital role in supporting investment in technology and lending to segments that are central to the economic and social recovery, such as MSMEs, women-owned enterprises, and lower-income households.

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