Ondřej Knot () (CERGE-EI, Prague, and Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague) Ondřej Vychodil () (CERGE-EI, Prague, and Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague)
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In this paper the authors discuss the factors that interact in the design of an optimal bankruptcy law. The authors focus on issues that are often overlooked in both the policy debate and in the academic research on bankruptcy. After answering the question why a bankruptcy law is needed at all, the authors discuss the criteria of ex ante vs. ex post efficiency. The second factor the authors deal with is institutional quality, namely the quality of the judiciary. They argue that, considering factors such as imprudence and corruption, it may be optimal to resign on the first-best solution that could be theoretically achievable with a benevolent and omniscient judiciary. The optimal bankruptcy law would then contain more simple and automatic rules and less space for judicial (i.e., individual) discretion. The authors´ concluding comment concerns the lack of empirical research in the bankruptcy area in the Czech Republic and the essential need for such research.
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Volume (Year): 55 (2005) Issue (Month): 3-4 (March) Pages: 110-123 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation K12 - Law and Economics - - Basic Areas of Law - - - Contract Law K29 - Law and Economics - - Regulation and Business Law - - - Other
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Philippe Aghion & Oliver D. Hart & John Moore, 1994.
"The Economics of Bankruptcy Reform,"
NBER Chapters,
in: Transition in Eastern Europe, Volume 2, The, pages 215-244
National Bureau of Economic Research, Inc.
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