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Keywords:Bankruptcy 

Working Paper
Household debt repayment behaviour: what role do institutions play?

Household debt repayment behavior has been understudied, especially empirically, despite the heightened debate on rising household debt, personal bankruptcy filings, and arrears. In this paper, we use data from the European Community Household Panel to analyze the determinants of household debt arrears. The paper's primary aim is to understand the role of institutions in household arrears by exploiting cross-country differences and the panel nature of the data set. We start our analysis by showing that falling into arrears has important long-term consequences for employment, self-employment, ...
Supervisory Research and Analysis Working Papers , Paper QAU08-3

Working Paper
Lending Standards and Borrowing Premia in Unsecured Credit Markets

Using administrative data from Y-14M and Equifax, we find evidence for large spreads in excess of those implied by default risk in the U.S. unsecured credit market. These borrowing premia vary widely by borrower risk and imply a nearly flat relationship between loan prices and repayment probabilities, at odds with existing theories. To close this gap, we incorporate supply frictions – a tractably specified form of lending standards – into a model of unsecured credit with aggregate shocks. Our model matches the empirical incidence of both risk and borrowing premia. Both the level and ...
Finance and Economics Discussion Series , Paper 2021-039

Journal Article
Will higher corporate debt worsen future recessions?

Economic Review , Volume 75 , Issue Mar , Pages 19-34

Journal Article
A comparison of U.S. corporate and bank insolvency resolution

In the U.S., the insolvency resolution of most corporations is governed by the federal bankruptcy code and is administered by special bankruptcy courts. Most large corporate bankruptcies are resolved under Chapter 11 reorganization proceedings. However, commercial bank insolvencies are governed by the Federal Deposit Insurance Act and are administered by the FDIC. These two resolution processes?corporate bankruptcy and bank receiverships?differ in a number of significant ways, including the type of proceeding (judicial versus administrative); the rights of managers, stockholders, and ...
Economic Perspectives , Volume 30 , Issue Q II

Working Paper
An anatomy of u.s. Personal bankruptcy under chapter 13

We build a structural model of Chapter 13 bankruptcy that captures salient features of personal bankruptcy under Chapter 13. We estimate our model using a novel data set we construct from bankruptcy court dockets recorded in Delaware between 2001 and 2002. Our estimation results highlight the importance of debtor?s choice of repayment plan length on Chapter 13 outcomes under the restrictions imposed by the bankruptcy law. We use the estimated model to conduct policy experiments to evaluate the impact of more stringent provisions of Chapter 13 that impose additional restrictions on the length ...
Working Papers , Paper 14-33

Working Paper
Unsecured debt with public insurance : from bad to worse

In U.S. data, income interruptions, the receipt of public insurance, and the incidence of personal bankruptcy are all closely related. The central contribution of this paper is to evaluate both bankruptcy protection and public insurance in a unified setting where each program alters incentives in the other. Specifically, we explicitly allow for distortion created by the default option and public insurance to affect 1) risk-taking, 2) borrowing, and 3) search effort. Our analysis delivers two striking conclusions. First, we find that U.S. personal bankruptcy law is an important barrier to ...
Working Paper , Paper 03-14

Working Paper
Credit access and credit performance after consumer bankruptcy filing: new evidence

This paper uses a unique data set to shed new light on the credit availability and credit performance of consumer bankruptcy filers. In particular, our data allow us to distinguish between Chapter 7 and Chapter 13 bankruptcy filings, to observe changes in credit demand and supply explicitly, to differentiate existing and new credit accounts, and to observe the performance of each credit account directly. The paper has four main findings. First, despite speedy recovery in their risk scores after bankruptcy filing, most filers have much reduced access to credit in terms of credit limits, and ...
Working Papers , Paper 13-24

Journal Article
Opinion : The economics of bankruptcy

Econ Focus , Volume 9 , Issue Sum , Pages 56

Working Paper
Did bankruptcy reform cause mortgage default rates to rise?

This paper argues that the U.S. bankruptcy reform of 2005 played an important role in the mortgage crisis and the current recession. When debtors file for bankruptcy, credit card debt and other types of debt are discharged - thus loosening debtors' budget constraints. Homeowners in financial distress can therefore use bankruptcy to avoid losing their homes, since filing allows them to shift funds from paying other debts to paying their mortgages. But a major reform of U.S. bankruptcy law in 2005 raised the cost of filing and reduced the amount of debt that is discharged. The authors argue ...
Working Papers , Paper 10-16

Journal Article
Subprime foreclosures and the 2005 bankruptcy reform

This article presents arguments and evidence suggesting that the bankruptcy abuse reform (BAR) of 2005 may have been one contributor to the destabilizing surge in subprime foreclosures. Before BAR took effect, overly indebted borrowers could file bankruptcy to free up income to pay their mortgage by having their credit card and other unsecured debts discharged. BAR eliminated that option for better-off filers through a means test and other requirements, thus making it harder to save one?s home by filing bankruptcy. By way of evidence, the authors show that the impact of BAR was greater in ...
Economic Policy Review , Volume 18 , Issue Mar , Pages 47-57

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Athreya, Kartik B. 22 items

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