IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/32556.html

Bankruptcy Resolution and Credit Cycles

Author

Listed:
  • Martin Kornejew
  • Chen Lian
  • Yueran Ma
  • Pablo Ottonello
  • Diego J. Perez

Abstract

We study how the macroeconomic dynamics following credit cycles vary with business bankruptcy institutions. Using data on bankruptcy efficiency and business credit around the world, we document that business credit booms are followed by severe declines in output, investment, and consumption in environments with poorly functioning business bankruptcy. On the contrary, in settings with well functioning business bankruptcy, the aftermath of credit booms is characterized by moderate changes in economic activities. We use a simple model to lay out how and when efficient bankruptcy systems can mitigate the negative consequences of credit booms.

Suggested Citation

  • Martin Kornejew & Chen Lian & Yueran Ma & Pablo Ottonello & Diego J. Perez, 2024. "Bankruptcy Resolution and Credit Cycles," NBER Working Papers 32556, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32556
    Note: CF EFG IFM ME
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w32556.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gil Nogueira & Geraldo Cerqueiro, 2025. "Judicial Enforcement, Credit Frictions, and the Transmission of Bankruptcy through Firm Networks," Working Papers w202529, Banco de Portugal, Economics and Research Department.
    2. Dean Corbae, 2024. "Comment on "Bankruptcy Resolution and Credit Cycles"," NBER Chapters, in: NBER Macroeconomics Annual 2024, volume 39, pages 40-54, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • G3 - Financial Economics - - Corporate Finance and Governance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:32556. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.