Abstract

http://ssrn.com/abstract=1572797
 
 

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Quiet Life No More? Corporate Bankruptcy and Bank Competition


Todd A. Gormley


University of Pennsylvania - The Wharton School

Nandini Gupta


Indiana University - Kelley School of Business - Department of Finance

Anand Jha


Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

December 4, 2014


Abstract:     
Pursuing delinquent borrowers requires considerable effort, and creditors may lack the incentive to exert this costly effort in uncompetitive banking sectors. Using a unique dataset on corporate bankruptcy filings in India and exploiting district-level variation in bank entry following deregulation, we find that increased banking competition is associated with an increase in filings by firms seeking a stay on assets, a decline in the duration of bankruptcy proceedings, and a shift towards workouts rather than liquidations. The results are consistent with creditors exerting greater effort to pursue delinquent firms and to resolve bankruptcies more quickly following deregulation.

Number of Pages in PDF File: 49

Keywords: Bankruptcy, creditor rights, bank competition, managerial incentives

JEL Classification: G21, G23, G28, G38

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Date posted: March 19, 2010 ; Last revised: December 5, 2014

Suggested Citation

Gormley, Todd A. and Gupta, Nandini and Jha, Anand, Quiet Life No More? Corporate Bankruptcy and Bank Competition (December 4, 2014). Available at SSRN: http://ssrn.com/abstract=1572797 or http://dx.doi.org/10.2139/ssrn.1572797

Contact Information

Todd A. Gormley (Contact Author)
University of Pennsylvania - The Wharton School ( email )
The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
(314) 313-4330 (Phone)
HOME PAGE: http://apps.olin.wustl.edu/faculty/Gormley/

Nandini Gupta
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3416 (Phone)
812-855-5875 (Fax)

Anand Jha
Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )
Bloomington, IN 47405
United States
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References:  89
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