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Table 2 Overview of informal credit types and associated conditions

From: Toward a typology of health-related informal credit: an exploration of borrowing practices for paying for health care by the poor in Cambodia

Type of credit and characteristics

Advantages and disadvantages

Frequency of use for health care*

Level of economic risk**

Short-term loan (Luy Roab)

 

+++++

++++

· Short lending period: 10–20 days

· Quick, easy access; addressing urgent requirements

  

· Relatively small amounts

· High interest rates coupled to daily repayment

  

· Daily repayment

   

· High interest (20%), to be paid as extra days of repayment

   

· Common in areas with commercial activities

   

· Usually no requirement for collateral or paper work

   

Medium-term loan (Luy Ruos)

 

+++

+++

· Lending period few months to a year

· Large amount for relatively long period

  

· Relatively big amount

· High interest rates and requirement for collateral, making it less accessible for poor people

  

· Interest rates of 5-10% per month

   

· Deadline for repayment

   

· Collateral required as well as official transaction

   

Seasonal loan

 

++

++

· In-between season lending: 6–10 months

· Easy access for farmers

  

· Relatively big amounts

· Repayment follows the farming cycle which is convenient for rural people

  

· Interest rates of 50-100% for the season

· Repayment in kind, just following harvest when prices are low

  

· Repayment after harvest, in crops

   

· Very common

Simple or no conditions

   

Loans for unspecified period (Luy Ngoab or Luy Chho)

 

++++

++

· Unspecified period

· Easy access for the poor

  

· Variable amount

· Absence of repayment deadline is favourable for poor people

  

· Relatively high interest: 1%/day; 5-30%/month

· High interest rates,

  
 

· requirement for collateral for big amounts

  

· Flexible timing for repayment

   

· Collateral for large amounts

   

Loans with repayment in labour (Yok Dai)

 

+

+

· Variable, though mostly short, lending period

· Easy access, especially for the poorest

  

· Relatively small amount

· No money required, independent of cash flow

  

· Interest of 100% for whole period

· Undervalued labour

  

· Repayment in labour valued at 50%

· Hampers foraging on which poor depend for survival

  

· Only available in rural areas

· High interest rates

  

· No lending conditions

   
  1. * rated from the less frequent ‘+’ to the most frequent ‘+++++’; ** rated from the lowest ‘+’ to the highest ‘++++’.