Credit card(s) and default risk: what ENFIH suggests for Mexican households
DOI:
https://doi.org/10.29105/trendinomics.v1i1.1Keywords:
Credit cards, Probability of defalut, Debt, Mexican householdsAbstract
This paper examines the impact of credit cards on the probability of defaulting on household debt in Mexico. Using probit models, we found that credit cards are directly related to household default in Mexico. Having more credit cards, an unpaid balance, or raising the average balance increases the household's likelihood of defaulting on its debt. In terms of financial inclusion, the findings suggest the need to provide financial education so that individuals know how to manage these financial instruments, which are more expensive and carry a higher credit risk.
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