Bankruptcy Resolution and Credit Cycles / Martin Kornejew, Chen Lian, Yueran Ma, Pablo Ottonello, Diego J. Perez.

Av: Medverkande: Materialtyp: TextSerie: Utgivningsinformation: Cambridge, Mass. National Bureau of Economic Research 2024.Beskrivning: 1 online resource: illustrations (black and white)Ämnen: Onlineresurser: Available additional physical forms:
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Abstrakt: 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.
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June 2024.

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.

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