Do Bankruptcy Codes Matter? A Study of Defaults in France, Germany, and the U.K
Abstract
Using a sample of small firms that defaulted on their bank debt in France, Germany, and the United Kingdom, we find that large differences in creditors' rights across countries lead banks to adjust their lending and reorganization practices to mitigate costly aspects of bankruptcy law. In particular, French banks respond to a creditor-unfriendly code by requiring more collateral than lenders elsewhere, and by relying on collateral forms that minimize the statutory dilution of their claims in bankruptcy. Despite such adjustments, bank recovery rates in default remain sharply different across the three countries, reflecting very different levels of creditor protection. Copyright 2008 by The American Finance Association.Download Info
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Bibliographic Info
Article provided by American Finance Association in its journal The Journal of Finance.
Volume (Year): 63 (2008)
Issue (Month): 2 (04)
Pages: 565-608
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Handle: RePEc:bla:jfinan:v:63:y:2008:i:2:p:565-608
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For corrections or technical questions regarding this item, or to correct its listing, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
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Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Bhatia, Jai, 2009. "The impact of insolvency laws on venture capital," MPRA Paper 21346, University Library of Munich, Germany.
- Giacinto Micucci & Paola Rossi, 2010. "Debt restructuring and the role of lending technologies," Temi di discussione (Economic working papers) 763, Bank of Italy, Economic Research Department.
- Cerqueiro, G.M. & Penas, M.F., 2011. "How Does Personal Bankruptcy Law Affect Start-ups?," Discussion Paper 2011-106, Tilburg University, Center for Economic Research.
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