We characterize the competitive equilibrium on the credit market when borrowers can strategically default. We assume that the audit is subject of errors of the two types and that lenders cannot commit ex-ante. We determine the penalty, the loan rate, the audit and strategic default...

The purpose of this article is to study accounting valuation practices in French bankruptcies following enactment of the Law of 1838. The research is based on a study of 500 files in the archives of the Paris Court of Commerce. After first presenting the main steps in the bankruptcy proceedings,...

This paper analyzes how bankruptcy litigation affects the value of relationship banking. In our model, bankruptcy courts may make type 1 errors, i.e., they may declare that an insolvent firm is solvent; and they may make type 2 errors, i.e., they may declare that a solvent firm is insolvent. Our...

Bankruptcy implies the involvement of legal procedure and a comprehensive examination of accounting. Yet the legislation, the function and the meaning of accounting have changed over the last centuries. To understand these changes, which have resulted in the judicialisation of procedures and the...

Since the early 1997 paper by La Porta et al., a growing body of research has argued that ‘legal origins’ have a country-specific, time-invariant effect on property rights and economic development. Following the methodology of La Porta et al., an original database of 51 bankruptcy laws has...

In this paper, we investigate the interactions between public debt and transfer policies in a framework based on Floden [2001], that we extend to allow for transitional dynamics between steady states. First, we show that, starting from a high level of public debt, it is possible to implement a...

This review of the literature presents the main tools and results of research at the crossroads between finance and macroeconomics. The literature seeks to jointly analyze the economic cycle and fluctuations in financial-asset prices.Our article follows this approach:we offer a critical analysis...