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Financial Risk of Uruguayan Households

Author

Listed:
  • Fernando Borraz

    () (Banco Central del Uruguay and dECON-FCS-Udelar)

  • Nicolas Gonzalez Pampillon

    () (IEB & Universitat de Barcelona)

Abstract

This study analyzes the financial risk of Uruguay households using the first nationally representative Uruguayan financial survey. The objective of this work is twofold. First, we simulate the impact on the finance of Uruguayan households of a negative income shock similar to the one experienced in 2002, finding that the financial risk is mild. We estimate a 175% increases in the number of households with financial burden higher than 0.75. Despite this big raise, this group is 10% of the population. Furthermore, the debt level is low in international terms. Secondly, we analyze over indebtedness among Uruguayan households. We observe that some variables are correlated with the fact of being over indebted. Nevertheless, when using the burden financial ratio as dependent variable we find that few variables can significantly explain it.

Suggested Citation

  • Fernando Borraz & Nicolas Gonzalez Pampillon, 2015. "Financial Risk of Uruguayan Households," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 30(2), pages 19-43, October.
  • Handle: RePEc:ila:anaeco:v:30:y:2015:i:2:p:19-43
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    References listed on IDEAS

    as
    1. Giovanni D’Alessio & Stefano Iezzi, 2013. "Household over-indebtedness - Definition and measurement with Italian data," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Proceedings of the Sixth IFC Conference on "Statistical issues and activities in a changing environment", Basel, 28-29 August 2012., volume 36, pages 496-517 Bank for International Settlements.
    2. Roberto Álvarez & Luis Opazo, 2013. "Household Debt During the Financial Crisis: Micro-Evidence from Chile," Working Papers Central Bank of Chile 695, Central Bank of Chile.
    3. Rodrigo Alfaro & Natalia Gallardo, 2012. "The Determinants of Household Debt Default," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 27(1), pages 55-70, April.
    4. Herrala, Risto & Kauko, Karlo, 2007. "Household loan loss risk in Finland : estimations and simulations with micro data," Research Discussion Papers 5/2007, Bank of Finland.
    5. Miguel Mello & Jorge Ponce, 2014. "The determinants Uruguayan households' indebtedness," Documentos de trabajo 2014010, Banco Central del Uruguay.
    6. Felipe Martínez & Rodrigo Cifuentes & Carlos Madeira & Rubén Poblete-Cazenave, 2013. "Measurement of Household Financial Risk with the Survey of Household Finances," Working Papers Central Bank of Chile 682, Central Bank of Chile.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Financial risk; household over indebtedness; financial survey; Uruguay;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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