What to do with my credit? Debt-consumption vs. Debt-investment evidence from the bottom of the pyramid.
Palabras clave:
Low income groups, credit usage, consumption decisions, investment decisionsResumen
This paper analyzes the use of money from a credit by low-income individuals, the so-called base of the pyramid. In addition, differences in terms of socioeconomic profiles and their effect over their behavior when it comes to credit use is analyzed. On the first hand side, a choice can be to use the money from a credit for investment purposes that may create opportunities for producing and generating revenue. This situation is called debt-investment and it is argued that it only happens under particular conditions. Additionally, there is an alternative category proposed, called debt-consumption, where the credit can be used to purchase goods and services that do not have direct productive uses. The result of the debt-consumption category has led to the emergence of many business models that use credit to promote consumption. These arguments are tested statistically on a sample in low income areas of Guadalajara, Mexico. The results show after adding some socioeconomic variables that people is more willing to consume than to invest.
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