Financial Risk of Uruguayan Households

Fernando Borraz; Nicolas Gonzalez Pampillon

doi:10.4067/S0718-88702015000200002

Authors

Fernando Borraz Banco Central del Uruguay and dECON-FCS-Udelar
Nicolas Gonzalez Pampillon IEB & Universitat de Barcelona

DOI:

https://doi.org/10.4067/S0718-88702015000200002

Keywords:

Financial risk, household over indebtedness, financial survey, Uruguay

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.

Downloads

Download data is not yet available.

References

Alfaro, R., & Gallardo, N. (2012). The determinants of household debt default. Revista de Análisis Económico, 27(1), 55–70. https://doi.org/10.4067/s0718-88702012000100003

Álvarez, R., & Opazo, L. (2013). Household debt during the financial crisis: Micro-evidence from Chile (Working Paper 695). Central Bank of Chile.

BCCh. (2010). Endeudamiento de los hogares en Chile: Análisis e implicancias para la estabilidad financiera [Household indebtedness in Chile: Analysis and implications for financial stability] (Informe de Estabilidad Financiera, junio). Banco Central de Chile.

BCU. (2012). Reporte del sistema financiero, tercer trimestre [Financial system report, third quarter]. Banco Central del Uruguay.

D'Alessio, G., & Iezzi, S. (2013). Household over-indebtedness: Definition and measurement with Italian data (Occasional Paper N.º 149). Bank of Italy.

Del Río, A., & Young, C. (2005). The impact of unsecured debt on financial distress among British households (Working Paper 262). Bank of England.

Fuenzalida, F., & Ruiz-Tagle, J. (2009). Riesgo financiero de los hogares [Household financial risk]. Economía Chilena, 12(2), 35–53.

Herrala, R., & Kauko, K. (2007). Household loan loss risk in Finland: An estimation and simulation with micro data (Research Discussion Paper 5). Bank of Finland.

Martínez, F., Madeira, C., Poblete-Cazanave, R., & Cifuentes, R. (2011). Measurement of household risk with the Survey of Household Finances [Conference presentation]. ISI World Statistics Congress, Dublin, Ireland. Bank for International Settlements.

Mello, M., & Ponce, J. (2014). Determinants of Uruguayan households' indebtedness. Banco Central del Uruguay.

Ruiz-Tagle, J., García, L., & Miranda, A. (2013). Proceso de endeudamiento y sobreendeudamiento de los hogares en Chile [Household indebtedness and over-indebtedness process in Chile] (Working Paper 703). Central Bank of Chile.

Sanromán, G. (2006). Returns to schooling in Uruguay. Revista de Economía (Banco Central del Uruguay), XXIII(2), 172–194.

Sanromán, G., Cladera, J. J., Ferre, Z., & Santos, G. (2013). Encuesta Financiera de los Hogares Uruguayos: Informe de resultados de la Encuesta EFHU-1 [Uruguayan Household Finance Survey: Report on the results of the EFHU-1 survey]. Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República.