The Impact of Bankruptcy Reform on Insolvency Choice and Consumer Credit

Jason Allen and Kiana Basiri ()

Staff Working Papers from Bank of Canada

Abstract: We examine the impact of the 2009 amendments to the Canadian Bankruptcy and Insolvency Act on insolvency decisions. Rule changes steered debtors out of division I proposals and into the more cost-effective division II proposals. This also led to a significant substitution out of bankruptcies and into proposals. Using credit bureau data on credit card limits we test, but do not find, any evidence that this substitution into more creditor-friendly insolvencies had any impact on average lending behavior, either immediately following the amendments or up to six years removed.

Keywords: Credit and credit aggregates; Financial Institutions; Financial system regulation and policies (search for similar items in EconPapers)
JEL-codes: D14 G2 K35 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2016
New Economics Papers: this item is included in nep-ban and nep-law
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:16-26

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