THE DEFAULT IN A CREDIT PROGRAM OF A MINAS GERAIS’ FINANCIAL PUBLIC INSTITUTION: AN ANALYSIS USING LOGISTIC REGRESSION

Abstract

This paper aims to propose an econometric model to estimate the risk of default on credit granted by apublic financial institution of the state of Minas Gerais. The model used contractual data, socio-economicpartners and the guarantors and economic-financial firms in a sample of 9,232 firms drawn from apopulation of 25,616 cases of financing to micro and small enterprises granted between Jun./97 and Dez./05.We used 22 independent variables related to the contract, the company and partners / guarantors, amongwhich five were important in predicting insolvency, correctly classifying 88.5% of companies. In conclusion,we can say that the amount financed and, consequently, the proportion of it consumed with the financing, are conditions of default, while the value of the assets of the guarantor in relation to funding, the value of fixedinvestments and uptime of the company act as protectors against default.