Insights into the Impact of Bankruptcy's Public Record on Entrepreneurial Activity: Evidence from Economic Experiments

Uwe Dulleck, Nicola J. Howell, Ann-Kathrin Koessler () and Rosalind F. Mason

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: Many Anglo-American jurisdictions aim to provide debtors with a 'fresh start' after a personal bankruptcy. However, we query the extent to which debtors can achieve a fresh start if records of individual bankruptcies are publicly available, with no restrictions on their use. To inform the legal policy question of whether bankruptcy records should be publicly available, we study the effect of the availability of bankruptcy records, compared to their non-existence, in an economic experiment. The experiment allows us to identify empirically the effect that the exposure of bankruptcy history has on the behaviour of investors and debtors. Our exploratory research shows that the availability of bankruptcy records increases investment. Availability also increases repayment behaviour by debtors, but only if the debtor has no history of bankruptcy (non-return of payments). If, however, a debtor failed to return payments in the past, and this information is available, debtors show lower instances of return behaviour.

Keywords: bankruptcy; investments; National Personal Insolvency Index; uncertainty; economic experiment; insolvency; public records (search for similar items in EconPapers)
JEL-codes: C90 D47 K20 K35 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ent, nep-exp and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/180667/1/D ... Public%20Records.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:180667

Access Statistics for this paper

More papers in EconStor Preprints from ZBW - Leibniz Information Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().