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The Bankruptcy Decision: Does Stigma Matter?

S. Fay, Erik Hurst () and M.J. White

Working Papers from Michigan - Center for Research on Economic & Social Theory

Abstract: In this paper, we model and estimate the effects of both bankruptcy stigma and financial benefit on household's decisions to file for bankruptcy. We show that the probability of debtors ling for bankruptcy rises when the level of bankruptcy stigma falls. We also show that the level of bankruptcy stigma has external effects , so that individual households are better off if their own bankruptcy stigma level is lower than that in the same credit pool.

Keywords: BANKRUPTCY; DECISION MAKING (search for similar items in EconPapers)
JEL-codes: G30 G33 (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:fth:michet:98-01

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