The failure rate of Small and medium enterprises (SMEs), is high in Sweden. Around 6000 SMEs go into bankruptcy every year. This paper attempts to identify the main determinants that are perceived to have contribution to the failure of Swedish SMEs. The research is in principle based on the analysis of panel data matched sample consisting of 1991 bankrupted and 1991 nonbankrupted Swedish SMEs. ...

Malpractice insurance provides for payments to patients so that a physician need not compensate harmed patients from personal assets. The bankruptcy system also protects a debtor's assets from seizure by creditors. In this paper, we estimate the e ect of personal asset protection on physician practice decisions. Variation in bankruptcy law provides exogenous variation in risk to physician perso...

We extend the contingent claims framework for the levered firm in explicitly modeling the resolution of financial distress under formal bankruptcy as a non-cooperative game between claimants under the supervision of the bankruptcy judge. The identity of the class of claimants proposing the first reorganization plan is found to be a key determinant of the likelihood of liquidation and of the ren...

We study insurance take-up choices by consumers who face medical-expense and income risks, knowing they can default on medical bills by filing bankruptcy. For a given bankruptcy system we explore total and distributional welfare effects of health insurance mandates, compared with pre-mandates market equilibrium. We consider different combinations of premium-subsides and out-of-insurance penalti...

This study examines the economic rationale for limiting firms’ risk. We argue that risk increases the cost of doing business for two reasons. First, risk causes operating inefficiencies and imposes adjustment costs. Second, diverse stakeholders must be compensated for their risk-bearing. We find empirical support for positive risk-cost relations using various model specifications and risk measu...

This paper integrates the problem of designing corporate bankruptcy rules into a theory of optimal debt structure. We show that, in an optimal contracting framework with imperfect renegotiation, having multiple creditors increases a firm’s debt capacity while increasing its incentives to default strategically. The optimal debt contract gives creditors claims that are jointly inconsistent in cas...

The problem of bankruptcy forecasting is one of the most actively studied nowadays, posing the task of building effective classifiers as well as the task of dealing with dataset imbalance. In this paper, we apply different combinations of modern learning algorithms (MDA, LR, CRT, and ANNs) in order to try to identify the most effective approach to bankruptcy prediction for Russian manufacturing...

We use a heterogeneous-agent model, in which labor income is risky and markets are incomplete, to analyze consumer debt portfolios of secured and unsecured debt in the US. Compared with previous research, we emphasize the role of durables which not only generate utility but also serve as debt collateral. This allows a meaningful joint analysis of secured and unsecured debt and introduces endoge...

This paper examines the performance of the Morningstar Solvency Score, Morningstar's new accounting-ratio based metric for predicting bankruptcy, in comparison to the Altman Z-Score and Distance to Default models. Specifically we tested the following: 1. The ordinal ability of each model to distinguish companies most likely to file for bankruptcy from those least likely to file for bankruptcy a...

The paper studies the effects of non-exclusivity of credit card contracts on the provision of insurance through the institution of personal bankruptcy. In our model, lenders can continually observe borrower’s time-varying creditworthiness and provide credit to them by undercutting (poaching) the existing lender(s). Contracts are non-exclusive and, to rollover their debt, borrowers may accept mu...