Epistemología, investigación y el proceso construcción de

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Epistemología, investigación y el proceso construcción de
Consumption and credit among the poor:
assessing “parallel” market features and behavior towards
cash-consumer credit among low income households in
Uruguay
Cecilia Rossel
November 17th, 2014
Consumer credit in LA
• Consumer credit access has been growing in most of Latin
American households for the last two decades
• Part of this process relates to the expansion of the banking
system and credit cards, which derived in the financial inclusion
of a growing middle class
• But the growth in consumer credit is also explained by the
opportunity for accessing these type of credit that non-banking
financial institutions (including cooperatives, retail stores, cash
credit institutions) started providing for lower income and poor
families
Objectives
• Describe the consumer credit market and its significance in
Uruguay, by focusing on the micro dynamics of access to
consumer credit and consumer credit borrowing in low income
families.
• Three descriptive questions:
– (i) what are the main features of the formal and informal
cash-consumer credit market in Uruguay and how does it
work?
– (ii) what are the attitudes and practices of the poor
population towards consumption and credit?
– (iii) what are the new risks and vulnerabilities –if any- that
emerge from taking credits through this market?.
Methods & data (i)
• Secondary information
• Mystery clients strategy
• Experts’ interviews
• In-depth interviews
Main results
• A growing market with aggressive strategies to attract low
income and poor clients, not always transparent, that seems to be
achieving its goals
• A precarious access to financial products in financially excluded
population
• A strong association of NBFI credit market with low income and
poor population (with a monthly or weekly link in all cases!)
• A rational/self-limiting discourse but with high levels of
multiborrowing and, in some cases, over-indebtedness
• Solidarity and networks as a by-pass to the obstacles imposed by
the credit score-card and the “debtor list”
• Over-indebtedness as a stressful/trapping situation, that is coped
–or at least faced- through different strategies
Policy implications & challenges
• Regulation challenges regarding:
–
–
–
–
information provided to consumers
practices of adding benefits
reporting to governments authorities
interest rates & credit conditions
• Financial education to low income and poor families, including
basic tips for understanding credit and guides for managing
financial situation and avoid over-indebtedness

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