The Spanish Business Bankruptcy Puzzle and the Crisis
AbstractSpain has the world’s lowest business bankruptcy rate (number of formal business bankruptcies divided by number of firms). We document this fact, analyze the Spanish institutional framework and compare it with those of other European countries. We argue that a way to organize the documented evidence is to keep into account both the ex-post and the ex-ante efficiency repercussions of the Spanish institutional framework. We propose a view that is based on the idea that the unattractiveness of bankruptcy procedures and the efficiency of mortgage collateral lead Spanish firms to reduce the risk of bankruptcy. We show that this view is compatible with stylized features of firms’ capital structures, asset structures, and profitability. We conclude with a description of recent developments in bankruptcies and bankruptcy legislation in Spain, and with a brief discussion of potential policy implications.
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Bibliographic InfoPaper provided by FEDEA in its series Working Papers with number 2010-11.
Date of creation: Mar 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-24 (All new papers)
- NEP-BAN-2010-04-24 (Banking)
- NEP-EEC-2010-04-24 (European Economics)
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- Nicodemo, Catia, 2013. "Immigration and Labor Productivity: New Empirical Evidence for Spain," IZA Discussion Papers 7297, Institute for the Study of Labor (IZA).
- Miguel García-Posada & Juan S. Mora-Sanguinetti, 2013. "Are there alternatives to bankruptcy? a study of small business distress in Spain," Banco de Espaï¿½a Working Papers 1315, Banco de Espa�a.
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