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Insolvency Regimes and Economic Outcomes

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  • Tatsiana Kliatskova
  • Loïc Baptiste Savatier

Abstract

When in distress, a firm may need restructuring or liquidation; in either case, legal uncertainty compounds the difficulty. Sound and efficient insolvency regimes are important as these not just positively affect investment, innovation, and economic growth, but also the supply and cost of credit. The design of appropriate insolvency frameworks in Europe is, however, still controversial. The debate is especially relevant as the European Commission just set a new legal framework for insolvency proceedings. This article both summarizes the recent Directive of the European Commission on minimum standards for national insolvency regimes and provides a review of the literature on how insolvency regimes affect real and financial sectors.

Suggested Citation

  • Tatsiana Kliatskova & Loïc Baptiste Savatier, 2019. "Insolvency Regimes and Economic Outcomes," DIW Roundup: Politik im Fokus 133, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwrup:133en
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.672204.de/DIW_Roundup_133_en.pdf
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    References listed on IDEAS

    as
    1. Vikrant Vig, 2013. "Access to Collateral and Corporate Debt Structure: Evidence from a Natural Experiment," Journal of Finance, American Finance Association, vol. 68(3), pages 881-928, June.
    2. Rodano, Giacomo & Serrano-Velarde, Nicolas & Tarantino, Emanuele, 2016. "Bankruptcy law and bank financing," Journal of Financial Economics, Elsevier, vol. 120(2), pages 363-382.
    3. Jun Qian & Philip E. Strahan, 2007. "How Laws and Institutions Shape Financial Contracts: The Case of Bank Loans," Journal of Finance, American Finance Association, vol. 62(6), pages 2803-2834, December.
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    Cited by:

    1. Kliatskova, Tatsiana & Savatier, Loïc Baptiste & Schmidt, Michael, 2023. "Insolvency regimes and cross-border investment decisions," Journal of International Money and Finance, Elsevier, vol. 131(C).
    2. Tatsiana Kliatskova & Loïc Baptiste Savatier, 2020. "Insolvency Regimes and Cross-Border Investment Decisions," Discussion Papers of DIW Berlin 1862, DIW Berlin, German Institute for Economic Research.

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