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Bankruptcy Law and Entrepreneurship

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  • Primo David M.
  • Green Wm Scott

Abstract

We explore the link between bankruptcy laws and entrepreneurship in the U.S states. Using two measures of entrepreneurship capturing alternative conceptions of this phenomenon, we find that bankruptcy laws more favorable to debtors lead to increased levels of self-employment in some cases, though the effect is non-monotonic in the level of assets protected by the law. Counter to the conventional wisdom, however, more generous laws are linked to lower levels of “innovative” entrepreneurship. The paper concludes by suggesting why developing more refined measures of entrepreneurship is necessary to better understand the impact of public policies on this most vital of human activities.

Suggested Citation

  • Primo David M. & Green Wm Scott, 2011. "Bankruptcy Law and Entrepreneurship," Entrepreneurship Research Journal, De Gruyter, vol. 1(2), pages 1-22, March.
    • Handle: RePEc:bpj:erjour:v:1:y:2011:i:2:n:5
    DOI: 10.2202/2157-5665.1013
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    References listed on IDEAS

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    Cited by:

    1. XU Peng, 2015. "Risk-taking and Firm Growth," Discussion papers 15061, Research Institute of Economy, Trade and Industry (RIETI).
    2. Amanda Ross & Shawn Rohlin, 2013. "State Bankruptcy Law and Entrepreneurship: Evidence from a Border Analysis," ERSA conference papers ersa13p253, European Regional Science Association.
    3. Evans, Jocelyn & Borders, Aberdeen Leila, 2014. "Strategically Surviving Bankruptcy during a Global Financial Crisis: The Importance of Understanding Chapter 15," Journal of Business Research, Elsevier, vol. 67(1), pages 2738-2742.
    4. Chong Kyoon Lee & Johan Wiklund & Alejandro Amezcua & Tae Jun Bae & Almantas Palubinskas, 2022. "Business failure and institutions in entrepreneurship: a systematic review and research agenda," Small Business Economics, Springer, vol. 58(4), pages 1997-2023, April.
    5. E. Mark Curtis & Ryan A. Decker, 2018. "Entrepreneurship and State Taxation," Finance and Economics Discussion Series 2018-003, Board of Governors of the Federal Reserve System (U.S.).
    6. González, Francisco, 2021. "Creditor rights and entrepreneurship: Evidence from legal changes," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 278-299.

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