Measuring Microcredit Delinquency Among Uruguayan Entrepreneurs: A Study of a Non-profit Microfinance Institution

This paper analyses the determinants of default risk in a non-profit Uruguayan microfinance institution when a regulatory change in favor of full financial inclusion occurred in the country. Different definitions of delinquency are also used, including some that refer to a default of a structural nature. The empirical study shows that the socio-demographic characteristics of the entrepreneur (gender, age) and of microcredit (repayments, amount, year, subsidies), the historical repayment behavior (installments), and the macroeconomic environment (wages, employment, electricity, location, sector), influence the likelihood of insolvency. Overall, the results show the importance of considering this heterogeneous set of variables in assessing the probability of default and, simultaneously, monitoring them to complement the expert judgment of loan officers.