Insolvency regimes and cross-border investment decisions

Arbeitspapier

This paper investigates the effect of reforms of insolvency regulations on cross-border debt and equity investments at a sectoral level. Using disaggregated data from the Securities Holdings Statistics by Sector (SHSS) and OECD-indicators on the efficiency of insolvency regulations, we find that investors prefer to invest more in countries with more efficient insolvency frameworks. The effect, however, differs across sectors, with households and institutional investors being particularly sensitive. In addition, share-holders are mostly responsive to prevention and streamlining tools, while debt-holders respond more to availability of restructuring tools. Finally, we show that countries with developed financial markets and effective government are the ones that see the largest debt and equity inflows after reforms of insolvency regulations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1862

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; International Financial Markets ; Bankruptcy; Liquidation
• Subject: capital market integration ; insolvency law ; sectoral effects

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kliatskova, Tatsiana ; Savatier, Loïc Baptiste
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/218983
• Last update: 10.03.2025, 11:41 AM CET