Bankruptcy acts as insurance if the decision to default is negatively correlated with income shocks. However, whether … bankruptcy provides insurance is dependent on the punishment for default. Such rules can instead cause the consumer to be credit … of the theory since rules about which assets may be kept by the debtor, the state exemptions, when filing for bankruptcy …

Under the assumption that asset markets are incomplete, this paper introduces bankruptcy in an intertemporal … argues that intervention in the form of a level of bankruptcy exemption can enhance not only social welfare but also … distributive equity. The bankruptcy law is carefully specified in the model. The model generates distributional changes in …

general equilibrium model. Binding ceilings on loan rates reduce the probability of bankruptcy. Lower bankruptcy rates result … in lower bankruptcy and liquidation costs. The authors state conditions under which the resources freed by this cost …