What matters more for South African households’ debt repayment difficulties?

Figures & data

Figure 1. Credit standing of consumers (June 2007–March 2014). Source: Author’s own calculations from National Credit Regulator, Credit Bureau Monitor data.

Table 1. Variable definition, sample mean values and expected signs (n = 2549).

Variable	Mean value	Description
Delinquent (dependent variable)	0.18	Binary variable (0/1): 1 if a household experienced arrears in the 12 months preceding the 2006 survey, 0 otherwise
Expenses-to-income	0.65	Continuous; total household expenditure in 2005 divided by total income in 2005 (1st and 99th percentiles) (minimum 0.11 to maximum 3.1) (+)
Family size increase	0.50	Increase in family size (continuous variables of 2002 and 2005 family size compared). Dummy: 1 if household members increased between 2002 and 2005, 0 otherwise (+)
Income shock	0.53	Decrease in income (comparisons of household’s 2002 and 2005 net income). Dummy: 1 if 2005 income is less, 0 otherwise (+)
Expenditure shock	0.66	Increase in expenditure. Dummy: 1 if the 2005 household expenditure is greater than 2002 expenditure, 0 otherwise (+)
Random shock	0.19	Dummy: 1 if household reported experiencing, in the year prior to the 2005 survey, at least one of the negative events listed, 0 if not (+)
Financial worries	0.67	How household classifies its overall financial situation in 2005. Dummy: 1 = very comfortable/comfortable/getting by, 0 = poor/very poor (+)
Per-capita income	R5, 791	Continuous: household per-capita income after deductions in 2005 (minimum R45 to maximum R20 000) (–)
Financial buffers	0.79	Continuous: if household had life insurance, bank account, both of these together or none of them in 2005 (–)
Homeownership	0.74	Dummy: 1 if family owns their primary residence in 2005, 0 otherwise 0 (–)

Table 2. Descriptive statistics of key variables for delinquent and non-delinquent samples (n= 2549).

	Mean
Variable	Non-delinquent	Delinquent	Corr	p*
Excessive spending
Expenses-to-income	0.64	0.65	0.003	0.900
Sources of shock
Family size increase	0.49	0.55	0.052	0.009
Income shock	0.51	0.58	0.055	0.006
Expenditure shock	0.65	0.73	0.061	0.003
Random shock	0.19	0.23	0.039	0.049
Financial worries	0.66	0.72	0.052	0.009
Ability to borrow
Homeownership	0.76	0.64	−0.106	0.000
Per capita income	R1, 460	R1, 336	−0.022	0.268
Financial buffers	0.63	0.64	0.003	0.857

Note: Corr = to bivariate correlation coefficients; p* = chi-square test for significance.

Table 3. Default risk logistic model for income shock and excessive spending.

	Dependent variable: delinquent = 1, non-delinquent = 0
				With ability to borrow
	Coeff	OR	ME	Coeff	OR	ME
Sources of shock
Income shock	0.015*** (0.006)	1.015*** (0.006)	0.002*** (0.001)	0.017** (0.007)	1.017** (0.007)	0.002** (0.001)
Random shock	0.324** (0.132)	1.383** (0.183)	0.047** (0.019)	0.374*** (0.135)	1.453*** (0.196)	0.053*** (0.019)
Expenditure shock	0.407*** (0.126)	1.502*** (0.190)	0.059*** (0.018)	0.492*** (0.138)	1.636*** (0.225)	0.070*** (0.020)
Family size increase	0.259** (0.110)	1.295** (0.142)	0.037** (0.016)	0.227** (0.112)	1.255** (0.141)	0.032** (0.016)
Financial worries	0.374*** (0.125)	1.454*** (0.181)	0.054*** (0.018)	0.364*** (0.128)	1.439*** (0.184)	0.052*** (0.018)
Excessive spending
Expenses-to-income 2	−0.363** (0.174)	0.696** (0.121)	−0.053** (0.025)	−0.366** (0.178)	0.693** (0.124)	−0.052** (0.025)
Expenses-to-income 3	−0.277 (0.173)	0.758 (0.131)	−0.040 (0.025)	−0.307* (0.177)	0.736* (0.130)	−0.044* (0.025)
Expenses-to-income 4	0.004 (0.166)	1.004 (0.166)	0.001 (0.024)	−0.010 (0.171)	0.990 (0.169)	−0.001 (0.024)
Expenses-to-income 5	−0.184 (0.174)	0.832 (0.145)	−0.027 (0.025)	−0.196 (0.179)	0.822 (0.147)	−0.028 (0.026)
Ability to borrow
Per-capita income				−0.000 (0.000)	1.000 (0.000)	−0.000 (0.000)
Financial assets				0.275* (0.161)	1.317* (0.211)	0.039* (0.023)
Homeownership				−0.648*** (0.118)	0.523*** (0.062)	−0.092*** (0.017)
Intercept	−2.146*** (0.198)	0.117*** (0.023)		−1.864*** (0.263)	0.155n (0.041)
N	2 316	2 316	2 316	2 282	2 282	2 282
AIC	2 161.69			2 101.83
Chi^2	49.52			83.08
Pseudo R^2	0.022			0.038

Notes: Robust standard errors in parentheses. AIC = Akaike Information Criterion for measure of the relative goodness of fit; Coeff = regression coefficients; OR = odd ratios; ME = marginal effects.

*** p < 0.01. ** p < 0.05. * p < 0.10.