Bankruptcy delay and firms’ dynamics

Alessandro Melcarne () and Giovanni Ramello ()

Small Business Economics, 2020, vol. 54, issue 2, No 3, 405-419

Abstract: Abstract The present paper explores the link between bankruptcy law and firms’ dynamics, focusing on Italy as a case study. Relying on a previous literature dealing with the concept of entrepreneurship “friendly” bankruptcy law, we stress the idea that bankruptcy institutions, although connected to a painful event for firms, might still yield beneficial consequences on a societal level. In particular, we find evidence that quicker judicial resolutions of liquidation bankruptcies have an impact on firms’ entry and exit rates in Italy, by reducing the indirect costs that a bankrupt firm must undergo and allowing a quicker reallocation of assets towards more efficient destinations. Such effect is related with firms’ organizational structure and size.

Keywords: Bankruptcy; Judicial delay; Entrepreneurship; Firms’ dynamics (search for similar items in EconPapers)
JEL-codes: D23 K22 K41 L26 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11187-018-0041-5

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