Arbeitspapier
Personal bankcuptcy law, wealth and entrepreneurship - Theory and evidence from the introduction of a 'fresh start'
A personal bankruptcy law that allows for a 'fresh start' after bankruptcy reduces the individual risk involved in entrepreneurial activity. On the other hand, as risk shifts to creditors who recover less of their credit after a debtor's bankruptcy, lenders may charge higher interest rates or ration credit supply, which can hamper entrepreneurship. Both aspects of a more forgiving personal bankruptcy law are less relevant for wealthy potential entrepreneurs who still risk losing their wealth, but tend not to face higher interest rates because they provide collateral. This paper illustrates these effects in a model and tests the hypotheses derived by exploiting the introduction of a 'fresh start' policy in Germany in 1999 as a natural experiment, based on representative household panel data. The results indicate that the insurance effect of a more forgiving personal bankruptcy law exceeds the interest effect and on balance encourages less wealthy individuals to enter into entrepreneurship.
- Sprache
-
Englisch
- Erschienen in
-
Series: Diskussionsbeiträge ; No. 2011/8
- Klassifikation
-
Wirtschaft
Personal Bankruptcy Law
Bankruptcy; Liquidation
Entrepreneurship
- Thema
-
personal bankruptcy law
insolvency
entrepreneurship
fresh start
Insolvenzrecht
Unternehmer
Kreditgeschäft
Zins
Kreditrationierung
Kreditsicherung
Ökonomischer Anreiz
Deutschland
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Fossen, Frank M.
- Ereignis
-
Veröffentlichung
- (wer)
-
Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft
- (wo)
-
Berlin
- (wann)
-
2011
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Fossen, Frank M.
- Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft
Entstanden
- 2011