Financing entrepreneurial activity in Uruguay: time to default in a public microcredit institution

María Nela Seijas-Giménez, Milagros Vivel-Búa, Rubén Lado-Sestayo and Sara Fernández-López

Venture Capital, 2022, vol. 24, issue 2, 173-201

Abstract: This paper develops a tool to predict the percentage of compliance in the repayment of microloans granted by non-profit microfinance institutions (MFI) of the Uruguayan government. The database consists of 1,357 microloans granted by the Program for the Strengthening of Productive Entrepreneurs (PFEP) of the Uruguayan Ministry of Social Development (MIDES) during the period 2012–2016. The paper uses Cox (1972) proportional risk model, employing four penalty modes: ENET, LASSO, AENET and ALASSO. The analysis shows that with a reduced set of variables that are easy for the MFI to obtain, it is possible to obtain high predictive power.

Date: 2022
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DOI: 10.1080/13691066.2022.2085070

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