Are there alternatives to bankruptcy? a study of small business distress in Spain
Small businesses, the majority of Spanish fi rms, rarely fi le for formal bankruptcy, and this has been the case even during the current economic crisis. This suggests that bankruptcy law has a limited role to play in the distress of small fi rms. We propose an explanation based on two premises: (i) bankruptcy procedures are more costly and drawn out than the main alternative procedure, the mortgage foreclosure; (ii) personal bankruptcy law is unattractive to the individual debtor. Empirical analyses on a large micro data sample of Spanish, French and UK fi rms corroborate our hypothesis. It is important to note that these results are based on data that do not yet capture the impact of recent reforms of the Spanish insolvency framework.
|Date of creation:||Oct 2013|
|Contact details of provider:|| Web page: http://www.bde.es/|
More information through EDIRC
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.:
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998.
"Law and Finance,"
Journal of Political Economy,
University of Chicago Press, vol. 106(6), pages 1113-1155, December.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, "undated". "Law and Finance," Working Paper 19451, Harvard University OpenScholar.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," Harvard Institute of Economic Research Working Papers 1768, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998. "Law and Finance," Scholarly Articles 3451310, Harvard University Department of Economics.
- Jeremy Berkowitz & Michelle J. White, 2004. "Bankruptcy and Small Firms' Access to Credit," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 69-84, Spring.
- Miguel García-Posada & Juan S. Mora-Sanguinetti, 2012. "Why do spanish firms rarely use the bankruptcy system? The role of the mortgage institution," Working Papers 1234, Banco de España;Working Papers Homepage.
- Cameron,A. Colin & Trivedi,Pravin K., 2008. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9787111235767, November.
- Nicola Gennaioli & Stefano Rossi, 2013.
"Contractual Resolutions of Financial Distress,"
Review of Financial Studies,
Society for Financial Studies, vol. 26(3), pages 602-634.
- Nicola Gennaioli & Stefano Rossi, 2006. "Contractual resolutions of financial distress," Economics Working Papers 1316, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2012.
- Nicola Gennaioli & Stefano Rossi, 2012. "Contractual Resolutions of Financial Distress," Working Papers 651, Barcelona Graduate School of Economics.
- Régis Blazy & Bertrand Chopard & Eric Langlais & Ydriss Ziane, 2013.
"Personal Bankruptcy Law, Fresh Starts, and Judicial Practice,"
Journal of Institutional and Theoretical Economics (JITE),
Mohr Siebeck, Tübingen, vol. 169(4), pages 680-702, December.
- Régis Blazy & Bertrand Chopard & Eric Langlais & Ydriss Ziane, 2011. "Personal Bankruptcy Law, Fresh Starts, and Judicial Practice," EconomiX Working Papers 2011-15, University of Paris Nanterre, EconomiX.
- Régis Blazy & Bertrand Chopard & Eric Langlais & Ydriss Ziane, 2013. "Personal bankruptcy law, fresh starts and judicial practice," Post-Print hal-01385890, HAL.
- Samuel Pinto Ribeiro & Stefano Menghinello & Koen De Backer, 2010. "The OECD ORBIS Database: Responding to the Need for Firm-Level Micro-Data in the OECD," OECD Statistics Working Papers 2010/1, OECD Publishing.
- Djankov, Simeon & McLiesh, Caralee & Shleifer, Andrei, 2007.
"Private credit in 129 countries,"
Journal of Financial Economics,
Elsevier, vol. 84(2), pages 299-329, May.
- Simeon Djankov & Caralee McLiesh & Andrei Shleifer, 2005. "Private Credit in 129 Countries," NBER Working Papers 11078, National Bureau of Economic Research, Inc.
- Shleifer, Andrei & Djankov, Simeon & McLiesh, Caralee, 2007. "Private credit in 129 countries?," Scholarly Articles 27867134, Harvard University Department of Economics.
- Julian Franks & Oren Sussman, 2005. "Financial Distress and Bank Restructuring of Small to Medium Size UK Companies," Review of Finance, Springer, vol. 9(1), pages 65-96, March.
- Marco Celentani & Miguel García-Posada & Fernando Gómez, 2010. "The Spanish Business Bankruptcy Puzzle and the Crisis," Working Papers 2010-11, FEDEA.
- Césaire A. Meh & Yaz Terajima, 2008. "Unsecured Debt, Consumer Bankruptcy, and Small Business," Staff Working Papers 08-5, Bank of Canada.
- Acharya, Viral V. & Sundaram, Rangarajan K. & John, Kose, 2011.
"Cross-country variations in capital structures: The role of bankruptcy codes,"
Journal of Financial Intermediation,
Elsevier, vol. 20(1), pages 25-54, January.
- Acharya, Viral V & John, Kose & Sundaram, Rangarajan K, 2005. "Cross-Country Variations in Capital Structures: The Role of Bankruptcy Codes," CEPR Discussion Papers 4916, C.E.P.R. Discussion Papers.
- Gilson, Stuart C. & John, Kose & Lang, Larry H. P., 1990. "Troubled debt restructurings*1: An empirical study of private reorganization of firms in default," Journal of Financial Economics, Elsevier, vol. 27(2), pages 315-353, October.
- Hayong Yun, 2009. "Matching Bankruptcy Laws to Legal Environments," Journal of Law, Economics, and Organization, Oxford University Press, vol. 25(1), pages 2-30, May.
- Grice, John Stephen & Ingram, Robert W., 2001. "Tests of the generalizability of Altman's bankruptcy prediction model," Journal of Business Research, Elsevier, vol. 54(1), pages 53-61, October.
- John Armour, 2001. "The Law and Economics of Corporate Insolvency: A Review," Working Papers wp197, Centre for Business Research, University of Cambridge.
- Berger, Allen N & Udell, Gregory F, 1995. "Relationship Lending and Lines of Credit in Small Firm Finance," The Journal of Business, University of Chicago Press, vol. 68(3), pages 351-381, July.
- Bolton, Patrick & Scharfstein, David S, 1996. "Optimal Debt Structure and the Number of Creditors," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 1-25, February.
- Sergei A. Davydenko & Julian R. Franks, 2008. "Do Bankruptcy Codes Matter? A Study of Defaults in France, Germany, and the U.K," Journal of Finance, American Finance Association, vol. 63(2), pages 565-608, April.
- Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
- Daniela Fabbri, 2010. "Law Enforcement and Firm Financing: Theory and Evidence," Journal of the European Economic Association, MIT Press, vol. 8(4), pages 776-816, June.
- Daniela Fabbri, 2010. "Law Enforcement and Firm Financing: Theory and Evidence," Journal of the European Economic Association, European Economic Association, vol. 8(4), pages 776-816, June.
When requesting a correction, please mention this item's handle: RePEc:bde:wpaper:1315. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (María Beiro. Electronic Dissemination of Information Unit. Research Department. Banco de España)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.