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https://ssrn.com/abstract=1572797
 
 

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Quiet Life No More? Corporate Bankruptcy and Bank Competition


Todd A. Gormley


Washington University in St. Louis

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

October 9, 2016

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

Abstract:     
Pursuing delinquent borrowers requires considerable effort, and creditors may lack the incentive to exert this costly effort in uncompetitive banking sectors. To examine this, we use a uniquely large dataset of public and private corporate bankruptcy filings spanning a banking-sector reform that deregulated bank entry across different regions of India. We find that increased banking competition is associated with more firms seeking a stay on assets, a decline in bankruptcy duration, and a shift towards workouts rather than liquidations. The results are consistent with creditors exerting greater effort to pursue delinquent firms and resolve bankruptcies more quickly when competition increases.

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: November 20, 2016

Suggested Citation

Gormley, Todd A. and Gupta, Nandini and Jha, Anand, Quiet Life No More? Corporate Bankruptcy and Bank Competition (October 9, 2016). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: https://ssrn.com/abstract=1572797 or http://dx.doi.org/10.2139/ssrn.1572797

Contact Information

Todd A. Gormley (Contact Author)
Washington University in St. Louis ( email )
One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
(314) 935-7171 (Phone)
HOME PAGE: http://www.gormley.info
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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