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Personal Liabilities and Bankruptcy Reform: An International Perspective
Author(s) -
Alexopoulos Michelle,
Domowitz Ian
Publication year - 1998
Publication title -
international finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.458
H-Index - 39
eISSN - 1468-2362
pISSN - 1367-0271
DOI - 10.1111/1468-2362.00007
Subject(s) - bankruptcy , insolvency , discretion , debt , economics , creditor , perspective (graphical) , law and economics , law , actuarial science , finance , political science , artificial intelligence , computer science
We document international changes in bankruptcy law pertaining to personal liabilities. Implications are investigated within a theoretical model, focusing on interest rates, employment, and bankruptcy incidence. Small‐firm employment rises as bankruptcy law becomes more stringent, but interest rates may increase. A tightening of bankruptcy law may not decrease bankruptcy probabilities, except in the stark case of no debt discharge. Strict rules pertaining to debt repayment are desirable, as opposed to court or pre‐court discretion. Pending international agreements with respect to cross‐border insolvency may lower interest rates, but do not necessarily imply a decrease in bankruptcy incidence.