Determinants of default of individuals in a credit union in Santa Catarina

Abstract

The credit bankruptcy operations are one of the main concerns of financial institutions, especially credit
unions, as it has a direct impact on their operating results. The adequate analysis of the associate’s profile and the
contracted credit operation makes it possible to identify, with greater assertiveness, characteristics that would increase
the probability of bankruptcy. The objective of the present study is to identify the main factors that affect the
bankruptcy in personal credit operations in a credit cooperative in Santa Catarina. To estimate the probability of
bankruptcy, a logistic regression model was used, which explicitly considers the individual characteristics of the
associates and the attributes of the products of a sample of 13,079 credit operations of the cooperative. Among
the individual characteristics of the associates, the separate civil status and the professional administrator category
are related to the greater probability of bankruptcy. Regarding the attributes of the products, the probability of
default is higher in the contracting of the rural credit modality. Finally, it is noted that relatively safer operations are
concentrated in well-educated, married individuals with a longer relationship with the cooperative and who contract
credit in modalities that demand counterpart in the form of movable or immovable property