Personal bankruptcy Ž lings have risen from 0.3 percent of households per year in 1984 to around 1.35 percent in 1998 and 1999, transforming bankruptcy from a rare occurrence to a routine event. Lenders lost about $39 billion in 1998 due to personal bankruptcy Ž lings. But economists have little understanding of why households Ž le for bankruptcy or why Ž lings have increased so rapidly. Until ...

This paper adopts a contingent-claim valuation framework to investigate the role of subordinated debt in alleviating the moral hazard problem in banking and providing the regulator with the information on the risk of bank assets. The incorporation of bankruptcy cost in the framework of the analysis provides some new evidence about the potential role of subordinated debt. The extent of market di...

An estimated 62% of individual bankruptcy filings in the United States were a direct result of costs borne from medical treatment following illness or injury. We consider the potential of online crowdfunding to alleviate the issue, wherein patients reach out to their social network for monetary support to help cover medical bills. We examine the effect of medical crowdfunding using proprietary ...

We examine the characteristics and limitations of the existing system of tort liability for addressing potential environmental damages from GM crops and consider whether environmental bonding could be used to address these risks. We find that in the case of GM crops, a bonding mechanism would complement some of the strengths of tort liability. Specifically, the bonding mechanism provides some p...

This paper analyzes the interaction between financial leverage and takeover activity. We develop a dynamic model of takeovers in which the financing strategies of bidding firms and the timing and terms of takeovers are jointly determined. In the paper, capital structure plays the role of a commitment device, and determines the outcome of the acquisition contest. We demonstrate that there exists...

the bankruptcy prediction models have long been proposedas a key subject in finance. the present study, therefore, makes aneffort to examine the corporate bankruptcy prediction through employmentof the genetic algorithm model. furthermore, it attempts to evaluatethe strategies to overcome the drawbacks of ordinary methods forbankruptcy prediction through application of genetic algorithms. thesa...

Bankruptcy is one of the most important issues in Financial Management and investment. Numerous studies on Bankruptcy Prediction have been carried out considering Quantitative factors and they applied different techniques on it to predict Bankruptcy, while only fewer studies have proposed and considered Qualitative factors for prediction of Bankruptcy and even then failure of bankruptcy persist...

Recent changes to Canadian bankruptcy law provide a natural experiment that we use to evaluate the impact of the international trend towards Chapter 11-style reorganization laws. Comparing random samples of reorganizing firms from before and after the law change show that changes to the law are associated with higher incentives for debtors to buy time prior to filing a proposal, a longer time i...

This paper analyzes bankruptcy problems with nontransferable utility as a generalization of bankruptcy problems with monetary estate and claims. Following the classical axiomatic theory of bankruptcy, we formulate some appropriate properties for NTU-bankruptcy rules and study their implications. We explore duality of bankruptcy rules and we derive several characterizations of the generalized pr...

This paper characterizes optimal currency hedging in several models of downside risk. We consider, in turn, three models of hedging: (i) a firm that chooses its hedging policy in the presence of bankruptcy costs; (ii) an all equity firm that faces a convex tax schedule; and (iii) a firm whose manager is subject to loss aversion. In all these models, and contrary to conventional wisdom, we show ...