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

This paper analyses the determinants of default riskRisk in a non-profit Uruguayan microfinance institutionMicrofinance institution (MFI) when a regulatory change in favor of full financial inclusionFinancial inclusion occurred in the country. Different definitions of delinquencyDelinquency are also used, including some that refer to a defaultDefault of a structural nature. The empirical study shows that the socio-demographic characteristics of the entrepreneurEntrepreneur (gender, age) and of microcreditMicrocredit (repayments, amount, year, subsidiesSubsidies), the historical repaymentRepayment behavior (installments), and the macroeconomic environmentEnvironment (wages, employmentEmployment, 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 defaultDefault and, simultaneously, monitoring them to complement the expert judgment of loan officers.