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The Role of Path Dependence in the Development of U.S. Bankruptcy Law, 1880-1938

Author

Listed:
  • Bradley A. Hansen
  • Mary Eschelbach Hansen

    (Department of Economics, American University)

Abstract

This paper provides an illustration of the mechanisms that can give rise to path dependence in legislation. Specifically it shows how debtor-friendly bankruptcy law arose in the United States as a result of a path dependent process. The 1898 Bankruptcy Act was not regarded as debtor-friendly at the time of its enactment, but the enactment of the law gave rise to changes in interest groups, beliefs about the purpose of bankruptcy law, and political party positions on bankruptcy that set the United States on a path to debtor-friendly bankruptcy law. Analysis of the path dependence of bankruptcy law produces an interpretation that is more consistent with the evidence than the standard interpretation that debtor-friendly bankruptcy law was the result of a political compromise in 1898.

Suggested Citation

  • Bradley A. Hansen & Mary Eschelbach Hansen, 2005. "The Role of Path Dependence in the Development of U.S. Bankruptcy Law, 1880-1938," Working Papers 2005-14, American University, Department of Economics.
    • Handle: RePEc:amu:wpaper:1405
    DOI: 10.17606/ebpm-q865
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    File URL: https://doi.org/10.17606/ebpm-q865
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    References listed on IDEAS

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    5. Irwin, Douglas A & Kroszner, Randall S, 1999. "Interests, Institutions, and Ideology in Securing Policy Change: The Republican Conversion to Trade Liberalization after Smoot-Hawley," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 643-673, October.
    6. Poole, Keith T & Rosenthal, Howard, 1993. "The Enduring Nineteenth-Century Battle for Economic Regulation: The Interstate Commerce Act Revisited," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 837-860, October.
    7. Oona Hathaway, "undated". "Path Dependence in the Law: The Course and Pattern of Legal Change in a Common Law System," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1002, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
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    Citations

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    Cited by:

    1. Jérôme Sgard, 2006. "Do legal origins matter? The case of bankruptcy laws in Europe 1808–1914," Sciences Po publications info:hdl:2441/6824, Sciences Po.
    2. repec:hal:wpspec:info:hdl:2441/6824 is not listed on IDEAS
    3. Jérôme Sgard, 2006. "Do legal origins matter? The case of bankruptcy laws in Europe 1808-1914," SciencePo Working papers Main hal-01021354, HAL.
    4. repec:spo:wpecon:info:hdl:2441/6824 is not listed on IDEAS
    5. repec:hal:spmain:info:hdl:2441/6824 is not listed on IDEAS
    6. Jérôme Sgard, 2006. "Do legal origins matter? The case of bankruptcy laws in Europe 1808-1914," Post-Print hal-01021354, HAL.

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    More about this item

    Keywords

    bankruptcy; path dependence;

    JEL classification:

    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-

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