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Financial Vulnerability and Financial Instruments: Evidence from Mexico

Author

Listed:
  • Daniela Fernanda Diaz

    (Storicard, Mexico City)

  • Sonia Di Giannatale

    (Centro de Investigacion y Docencia Economicas (CIDE), Division de Economia)

  • Irvin Rojas

    (Centro de Investigacion y Docencia Economicas (CIDE), Division de Economia)

Abstract

We perform an empirical analysis to quantify the effect of holding financial instruments, such as savings and credit, on the financial vulnerability of households. Financial vulnerability refers to their capacity to withstand adverse economic shocks and fulfill regular payment obligations. Utilizing data from the 2018 National Survey of Financial Inclusion in Mexico, we construct a financial vulnerability index and perform a propensity score matching analysis to estimate the effect of holding financial instruments on financial vulnerability. Our findings indicate that holding savings instruments, both formal and informal, as well as formal credit, mitigate financial vulnerability. However, we also find that having informal credit contributes to an increase in financial vulnerability.

Suggested Citation

  • Daniela Fernanda Diaz & Sonia Di Giannatale & Irvin Rojas, 2023. "Financial Vulnerability and Financial Instruments: Evidence from Mexico," Sobre México. Revista de Economía, Sobre México. Temas en economía, vol. 1(8), pages 94-134.
    • Handle: RePEc:smx:journl:08:94:134
    as

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    File URL: https://sobremexico-revista.ibero.mx/index.php/Revista_Sobre_Mexico/article/view/133
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G52 - Financial Economics - - Household Finance - - - Insurance

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