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Norms In Private Insolvency Procedures: The 'London Approach' To The Resolution Of Financial Distress


  • John Armour
  • Simon Deakin


Law and economics scholarship has recently begun to investigate the role of social norms in shaping actors' incentives. This paper presents empirical findings on the way in which a group of such norms, known collectively as the 'London Approach', guide the resolution of financial distress by creditors of large UK firms and act as a substitute for legal insolvency proceedings. It appears that regulatory pressure applied by the Bank of England may have been critical in 'seeding' these norms. The paper also examines the prospects for the London Approach's future in light of changes in the financial environment brought about by globalisation.

Suggested Citation

  • John Armour & Simon Deakin, 2000. "Norms In Private Insolvency Procedures: The 'London Approach' To The Resolution Of Financial Distress," Working Papers wp173, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp173
    Note: PRO-2

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    Cited by:

    1. Robert R. Bliss, 2003. "Resolution of large complex financial organizations," Working Paper Series WP-03-07, Federal Reserve Bank of Chicago.

    More about this item


    social norms; corporate insolvency; London Approach; norm seeding;

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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