Quality in the financial sector from the perspective of consumer credits by socioeconomic and demographic characteristics

Abstract

This study relates to the quality of services in the financial sector by identifying the factors affecting consumer credit risks of households, considering their socioeconomic and demographic characteristics. To do this, we build our analyses on 5120 households from Turkey for the years 2006 and 2007, which coincide with the economic expansion period of the country. We use binary logistic regressions in which the creditworthy households are identified as the ones who did not default in their payments of housing rents or (and) mortgages within the past 12 months. We further make robustness tests by only considering higher income earning households with distorted expenditure behaviours. Overall, our results indicate the consumer credits risk attributes of the households driven by the supply and demand sides of the consumer credits.

Keywords:

• consumer credit
• credit risks
• Turkey

JEL Codes:

• G14
• G20

Notes

See, among others; for the basis of the argument Jaffee and Russell (1976) and Stiglitz and Weiss (1981).

See, among others, Hazembuller, Lombardi, and Hogarth (2007).

For more information on the interregional disparities between peripheral regions in Turkey, see Gezici and Hewings (2004).

Moreover, in the study of collectivism and individualism by Hofstede (1980), Turkish culture has repeatedly been described as a moderate collectivistic culture, in which family ties are characterised as being very strong.

Moreover, it must be taken under consideration that the level of housing rents in the southeastern region of Turkey is the lowest among the other six geographic regions of the country.

This result is identical to the finding in Arslan and Karan (2010).

See, among others Strauss and Thomas (1995) and Jimenez and Saurina (2004).