BANKRUPTCY REFORM’S ROLE IN THE MORTGAGE CRISIS This paper argues that the U.S. bankruptcy reform of 2005 played an important role in the mortgage crisis and the current recession. When debtors file for bankruptcy, credit card debt and other types of debt are discharged — thus loosening debtors’ budget constraints. Homeowners in financial distress can therefore use bankruptcy to avoid losing th...

After the 2007-2008 subprime financial crisis considering bankruptcy evaluation for the banking industry becomes vital. In line of that, this study aims to analyze the bankruptcy profile of foreign versus domestic Islamic banks operating in Malaysia. This study predicted 40% and 75% bankruptcy in the subjected samples of foreign and domestic Islamic banks of Malaysia respectively. However, the ...

C urrent U.S. bankruptcy law has two separate bankruptcy procedures, known as Chapter 7 and Chapter 13. When a debtor files for bankruptcy under Chapter 7, he or she must give up all assets not legally sheltered from creditor seizure in exchange for a discharge of almost all preexisting debts. Under Chapter 13, a debtor may keep all property in exchange for a promise to pay all or some specifie...

This empirical study analyzes the value destruction in US and German firms prior and around their bankruptcy announcement and makes a matched sample comparison between the two bankruptcy codes. The dataset consists of 1160 US and 116 German firms, having filed for bankruptcy between 1999 and 2007. Different market and balance sheet based data are used to explain the divergent stock reaction aro...

BACKGROUND We examined the association between personal bankruptcy filing and acute myocardial infarction (AMI) rates in Canada. METHODS Between 2002 and 2009, aggregate and yearly bankruptcy and AMI rates were estimated for 1,155 forward sortation areas of Canada. Scatter plot and correlations were used to assess the association of the aggregate rates. Cross-lagged structural equation models...

An understanding of factors related to trends in the incidence of personal nonbusiness bankruptcy is important to credit managers as well as to economists. This study updates and extends to 1982 an earlier study of economic factors associated with the incidence of bankruptcy from 1950 to 1970. This study shows that the incidence of personal bankruptcy follows movements in a measure of the aggre...

In a bankruptcy problem, there is an estate to be divided among a number of claimants, whose total claim exceeds the estate available. The multi-issue allocation situations are used to model bankruptcylike problems in which the estate is divided not on the basis of a single claim for each agent, but several claims resulting from so-called issues. These situations were studied by Calleja et al. ...

This paper analyzes corporate bond valuation and optimal call and default rules when interest rates and firm value are stochastic. It then uses the results to explain the dynamics of hedging. Bankruptcy rules are important determinants of corporate bond sensitivity to interest rates and firm value. Although endogenous and exogenous bankruptcy models can be calibrated to produce the same prices,...

The U.S. personal bankruptcy system functions as a bankruptcy system for small businesses as well as consumers, because debts of noncorporate firms are personal liabilities of the firms’ owners. If the firm fails, the owner has an incentive to file for bankruptcy, since both business debts and the owner’s personal debts will be discharged. In bankruptcy, the owner must give up assets above a fi...

Discriminant analysis and logit analysis are traditionally used to predict company bankruptcies. More recently, neural networks have been shown to outperform these statistical methods for the problem. The selection of nancial indicators as independent variables for all these methods is a major problem. In this paper, we let a genetic algorithm operate on a set of variables. The goal is to nd th...