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The Economic Impact of Rescue and Recovery Frameworks in the EU

Author

Listed:
  • Mihaela Carpus Carcea
  • Daria Ciriaci
  • Dimitri Lorenzani
  • Peter Pontuch
  • Carlos Cuerpo

Abstract

This paper provides empirical support to the important role of efficient pre-insolvency frameworks in fostering a culture of early restructuring and second chances in EU Member States and the positive impact that this has on entrepreneurship, as well as the timeliness and cost of corporate and household deleveraging. The analysis is based on a set of composite indicators measuring specific efficiency aspects of rescue and recovery frameworks. These were built using principal component analysis applied on a comparison of the legal provisions they encompass. Econometric analysis carried out on the basis of these indicators suggests that, across the EU, efficient pre-insolvency frameworks are positively associated with relatively higher levels of entrepreneurship and deleveraging episodes with a relatively milder impact on financial stability and economic activity.

Suggested Citation

  • Mihaela Carpus Carcea & Daria Ciriaci & Dimitri Lorenzani & Peter Pontuch & Carlos Cuerpo, 2015. "The Economic Impact of Rescue and Recovery Frameworks in the EU," European Economy - Discussion Papers 004, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:dispap:004
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    File URL: https://economy-finance.ec.europa.eu/publications/economic-impact-rescue-and-recovery-frameworks-eu_en
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    Citations

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    Cited by:

    1. Fritz Breuss, 2016. "The Crisis Management of the ECB," WIFO Working Papers 507, WIFO.
    2. Müge Adalet McGowan & Dan Andrews & Valentine Millot, 2017. "Insolvency regimes, zombie firms and capital reallocation," OECD Economics Department Working Papers 1399, OECD Publishing.
    3. Valiante, Diego, 2016. "Harmonising Insolvency Laws in the Euro Area: Rationale, stocktaking and challenges," CEPS Papers 12024, Centre for European Policy Studies.
    4. Consolo, Agostino & Malfa, Federica & Pierluigi, Beatrice, 2018. "Insolvency frameworks and private debt: an empirical investigation," Working Paper Series 2189, European Central Bank.
    5. Nieto-Carrillo, Ernesto & Carreira, Carlos & Teixeira, Paulino, 2022. "Giving zombie firms a second chance: An assessment of the reform of the Portuguese insolvency framework," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 156-181.
    6. Pierluigi, Beatrice & Sondermann, David, 2018. "Macroeconomic imbalances in the euro area: where do we stand?," Occasional Paper Series 211, European Central Bank.
    7. Yaroslav Hrynchyshyn, 2021. "Preventive Restructuring as a New Trend of Insolvency Legislation," Oblik i finansi, Institute of Accounting and Finance, issue 2, pages 51-60, June.
    8. Jean-Charles Bricongne & Mathilde Dufouleur, 2024. "Impact of Insolvency Regimes on NPLs: Two Birds in the Bush is Worth One in the Hand," Working papers 953, Banque de France.
    9. Andreas Jobst & Miss Anke Weber, 2016. "Profitability and Balance Sheet Repair of Italian Banks," IMF Working Papers 2016/175, International Monetary Fund.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law

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