Saving Viable Businesses : The Effect of Insolvency Reform
The 2008 financial crisis and consequent rise in corporate insolvencies highlight the clear need for efficient bankruptcy systems to liquidate unviable firms and reorganize viable ones and to do so in a way that maximizes the proceeds for creditors...
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| Format: | Viewpoint |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2011/09/16198955/saving-viable-businesses-effect-insolvency-reform http://hdl.handle.net/10986/11056 |
| Summary: | The 2008 financial crisis and consequent
rise in corporate insolvencies highlight the clear need for
efficient bankruptcy systems to liquidate unviable firms and
reorganize viable ones and to do so in a way that maximizes
the proceeds for creditors, shareholders, employees, and
other stakeholders. This note summarizes the empirical
literature on the effect of insolvency reforms on economic
and financial activity. Overall, research suggests that
effective reforms increase timely repayments, reduce the
cost of credit, and lower the rate of liquidation among
distressed firms. |
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