Financial Vulnerability and Financial Instruments: Evidence from Mexico

We perform an empirical analysis to quantify the effect of holding financial instruments, such as savings and credit, on the financial vulnerability of households. Financial vulnerability refers to their capacity to withstand adverse economic shocks and fulfill regular payment obligations. Utilizing...

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Bibliographic Details
Published in:Sobre México : temas de economía Vol. 1; no. 8; pp. 94 - 134
Main Authors: Díaz, Daniela Fernanda, Di Giannatale, Sonia, Rojas, Irvin
Format: Journal Article
Language:English
Published: Universidad Iberoamericana 04.09.2023
Subjects:
Financial Instruments
Financial Vulnerability
ISSN:2448-7325, 2448-7325
Online Access:Get full text
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Summary:We perform an empirical analysis to quantify the effect of holding financial instruments, such as savings and credit, on the financial vulnerability of households. Financial vulnerability refers to their capacity to withstand adverse economic shocks and fulfill regular payment obligations. Utilizing data from the 2018 National Survey of Financial Inclusion in Mexico, we construct a financial vulnerability index and perform a propensity score matching analysis to estimate the effect of holding financial instruments on financial vulnerability. Our findings indicate that holding savings instruments, both formal and informal, as well as formal credit, mitigate financial vulnerability. However, we also find that having informal credit contributes to an increase in financial vulnerability.
ISSN:2448-7325
2448-7325
DOI:10.48102/rsm.v1i8.133