Personal Bankruptcy Law: An Economic Analysis

ISBN-13: 9783824483440 / Angielski / Miękka / 2005 / 117 str.

Steiger, Eva-Maria

Opis

Eva-Maria Steiger classifies the mechanisms triggered by U.S. and European consumer bankruptcy regulations and tests them within a hidden action model. She identifies an influence on consumer effort choice at two dates - prior to distress and post filing -, appraises the capacity of the regulations to implement the efficient choice at both dates, and proposes a regulation to mitigate the identified distortions.

Spis treści

1 Introduction.- 2 Legal Background and Extant Literature.- 3 The Model.- 3.1 Setting.- 3.2 Conventionalized Bankruptcy Regulations.- 4 Ex-Post Analysis.- 4.1 First-Best.- 4.2 Performance of Existing Rules.- 4.3 Proposal.- 4.3.1 Inter-temporal Considerations.- 4.3.2 Effects of Risk-Aversion.- 4.3.2.1 Discrete Effort.- 4.3.2.2 Continuous Effort.- 4.4 Other Reform Proposals.- 4.4.1 Variable Period of Good Conduct.- 4.4.2 Partial Garnishment.- 4.4.3 Period of Supervision.- 4.5 Return to the Creditor.- 4.6 Numerical Example.- 4.7 Discussion.- 4.8 Results and Implications.- 5 Ex-Ante Analysis.- 5.1 Setting.- 5.2 First Best.- 5.3 Performance of Various Rules.- 5.3.1 Chapter 7.- 5.3.2 No Debt Release.- 5.3.3 German Regulation.- 5.3.4 Proposal.- 5.4 Extensions.- 5.4.1 Collateral.- 5.4.1.1 Reaffirmations under Chapter 7.- 5.4.1.2 Reaffirmations and Out-of-Court Negotiations under other Regulations.- 5.4.2 Changes in Income Expectations.- 5.4.3 Stigma and other Non-Monetray Penalties.- 5.5 Numerical Example.- 5.6 Risk Attitude.- 5.6.1 Risk Aversion.- 5.6.2 Time Dependent Choice.- 5.6.3 Bounded Rationality.- 5.7 Discussion.- 5.8 Results.- 6 Ex-Ante vs. Ex-Post Efficiency.- 7 Conclusion.

O autorze

Dr. Eva-Maria Steiger promovierte am interdisziplinären Graduiertenkolleg Recht und Ökonomik der Universität Hamburg. Sie ist wissenschaftliche Assistentin am Walther-Rathenau-Institut für Organisationstheorie der Humboldt Universität zu Berlin.

Blurb

In the light of increasing household debt, several European countries amended regulation for consumer debt release. These regulations affect consumer behavior, in particular with respect to labor supply, causing in an extreme case a heavily indebted consumer to discontinue efforts. Yet effects on the effort choice may be observed even prior to distress.

Eva-Maria Steiger analyzes the influence of the bankruptcy regulation on a consumer's effort choice. She classifies the mechanisms triggered by both U.S. and European bankruptcy regulations and tests them within a hidden action model. Identifying an influence on consumer choice prior to distress and post filing, she appraises the capacity to implement the efficient choice at both dates. Even though the institution of debt release provides adequate bankruptcy regulation ex-post, many regulations are likely to distort the debtor's choices. According to the analysis, the author's proposed regulation enhances incentives and minimizes distortions at both dates.