Determinants of individual default rates at credit cooperatives in Santa Catarina

Default on credit operations is a major concern for financial institutions, especially credit cooperatives, as it directly impacts their operating results. Proper analysis of the member's profile and the contracted credit operation allows for more accurate identification of characteristics that increase the probability of default. The objective of this study is to identify the main factors affecting default on credit operations for individuals in a credit cooperative in Santa Catarina. To estimate the probability of default, a logistic regression model was used, explicitly considering the individual characteristics of the members and the attributes of the products in a sample of 13,079 credit operations from the cooperative. Among the individual characteristics of the members, being separated and being an administrator as a professional are associated with a higher probability of default. Regarding product attributes, the probability of default is higher in rural credit contracts. Finally, it is noted that the relatively safer operations are concentrated among female individuals who are well- educated, married, have a longer relationship with the cooperative, and who take out loans in modalities that require collateral in the form of movable or immovable property.