We analyse an economy where principals and agents match and contract subject to moral hazard. Bankruptcy law defines the limited liability constraint in these contracts. We analyse Walrasian allocations to generate the following predictions: (i) weakening bankruptcy law causes redistribution of debt and welfare from poor agents and principals to rich agents; (ii) exemption limits Pareto-dominat...

This paper demonstrates the important role of job displacement in the household bankruptcy decision. I develop a dynamic, forward-looking model of unemployment and bankruptcy where persistent negative income shocks increase a household’s likelihood of filing for bankruptcy both immediately and in the future. Consistent with the model’s predictions, I find that households in the NLSY are four ti...

Bankruptcy reorganization in the United States has traditionally offered a bankrupt debtor the opportunity to seek a “fresh start” from its creditors and reorder its affairs to move forward without the pressure of outstanding debts.1 Though this may be just one of many aims promoted by the current bankruptcy framework,2 the architecture of the present-day Bankruptcy Code (the Code)—implemented ...

Bankruptcy prediction is one of the major business classification problems. The main purpose of this study is to investigate Kohonen self-organizing feature map in term of performance accuracy in the area of bankruptcy prediction.  A sample of 108 firms listed in Tehran Stock Exchange is used for the study. Our results confirm that Kohonen network is a robust model for predicting bankruptcy in ...

Bankruptcy prediction has been addressed by many researchers in the field of finance since few decades. One of the best approaches to deal with this issue is considering it as a classification problem. In this paper a time series prediction model of bankruptcy via Adaptive neuro-fuzzy inference system (ANFIS) is formulated, which is capable of predicting the bankruptcy of a firm for any future ...

-Signs of a potential business bankruptcy are evident well before actual bankruptcy occurs. For managers, creditors, and all other concerned parties this lag allows time to take remedial action. Therefore, building models, which signal approaching financial failure, have been an important part of corporate finance literature, in order to help management refocus their energy, revaluate their cor...

During the 2008 financial crisis, general municipalities' across the United States began considering bankruptcy as a means for resolving systemic budget crises. This signified a substantial shift in the relationship between municipalities and Chapter 9 of the federal bankruptcy code. Until 2008, few general municipalities filed under Chapter 9. Special utility districts filed most Chapter 9 pet...

A much higher fraction of U.S. households would benefit financially from bankruptcy than actually file. While the current bankruptcy filing rate is about 1% of households each year, I calculate that at least 15% of households would benefit financially from filing and the actual figure would be several times higher if most households plan in advance for the possibility of filing. Two explanation...

The development of the Cyprus Stock Exchange together with the increasing trend of investors’ presence in financing activities has led to the importance of this market. In such circumstances, the first step towards a sustainable development of the Exchange is to support the investors. Risk of bankruptcy for the investee is a major challenge that an inexperienced stock investor encounters. In th...

A commonly held belief of game theorists is that the pre-nucleolus of the modest bankruptcy game is identical to the pre-nucleolus of its dual game, the greedy bankruptcy game. In this paper we provide some results that indicate that this belief is false. We establish some non-coincidence results of the pre-kernel and pre-nucleolus of the modest bankruptcy game with respect to the pre-kernel an...