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Characterizing the Over-indebted: An Event History Analysis of Financial Diaries

Sachit Rao and Navitha Parthasarathy

Journal of Emerging Market Finance, 2022, vol. 21, issue 3, 245-264

Abstract: Low-income households (HHs) face vagaries in income and expenses. These often require the HH to borrow and can cause the HH to become over-indebted. Financial Diaries capture information on incomes, expenses, loans, and shocks with fine granularity and at frequent intervals. In this article, such a dataset is analyzed using the event history analysis approach in order to quantify the risk of HHs becoming over-indebted. Over-indebtedness is defined using two rubrics: monthly debt-to-income ratio and sacrifices made by the HH. The results of this analysis may be used by institutions to customize financial instruments based on the characteristics of an HH. JEL Codes: C410, C810, C830

Keywords: Low-income households; over-indebtedness; financial diaries; event history analysis; proportional hazards; Cox PH model (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1177/09726527221079957

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