Determinants of Households’ Default Probability in Uruguay

María Landaberry ()

Chapter 14 in Financial Decisions of Households and Financial Inclusion: Evidence for Latin America and the Caribbean, 2018, pp 463-506 from Centro de Estudios Monetarios Latinoamericanos, CEMLA

Abstract: This paper estimates models on the default probability of households in Uruguay considering sociodemographic and financial characteristics using data obtained from the second edition of the Household Financial Survey and the Continuous Household Survey. It studies the differences between the nonmortgage credit and credit card segments. Household income, the relation between income and expenditure, and the age of the household head are significant for explaining default probability in all the segments, while the education of the household head is only relevant for the nonmortgage credit segment. Furthermore, we apply the results of the model to assess the impact on household debt default by the obligation to pay salaries through electronic media introduced by the Financial Inclusion Law. According to the results, having a bank account increases the number of households with nonmortgage and credit card debt. However, in the former segment the group of households that take out nonmortgage credit is riskier and the debt default rate rises, while in the credit card segment the debt default rate remains at the same level.

Keywords: financial stability; Uruguay; financial survey; indebtedness. (search for similar items in EconPapers)
JEL-codes: C5 G01 G19 (search for similar items in EconPapers)
Date: 2018
ISBN: 978-607-8582-00-6 (online)
Note: Joint Research Program of the Central Bank Researchers Network
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