How Riba Affect Economic Performance in Cambodia

Abstract

This study investigates about interest rate to economy including economic growth, investment, and consumption in Cambodia.This study uses vector analysis method with a time period starting from 2000 to 2020 using secondary data from the World Bank. This study investigates the causal relationship between variables including interest rates, consumption, investment and GDP. We found that Interest rates in Cambodia have a negative return on economic growth, this shows that interest rates suppress economic growth and have a significant impact on economic performance in Cambodia. Interest rates also suppress investment and domestic consumption of course this has a bad impact on economic performance. However, an increase in economic growth actually pushed up interest rates. This will result in greater pressure on the economy in the future.