The Brazilian Bankruptcy Law Experiment

30 Pages Posted: 3 Oct 2010

See all articles by Aloisio Pessoa de Araujo

Aloisio Pessoa de Araujo

Getulio Vargas Foundation (FGV) - Escola de Pos-Graduacao (EPGE) and IMPA

Rafael Ferreira

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças

Bruno Funchal

FUCAPE Business School; Getulio Vargas Foundation (FGV) - Escola de Pos-Graduacao (EPGE)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2, 2010

Abstract

In early 2005 a new bankruptcy law was approved by the Brazilian Congress, taking effect a few months later. The new legislation improved creditor protection and the bankruptcy system's efficiency. This paper tries to shed some light on the empirical consequences of a bankruptcy reform on a poorly developed credit market. Using data from Argentine, Brazilian, Chilean and Mexican firms, we estimated two diff-in-diff models with differential trends: one with a firm-specific trend and the other with a country-specific macro trend. Both models yielded similar results. We found significant impacts on the supply of credit, the cost of debt, and the supply of secured, unsecured and long-term debt. No significant impacts were found for the level of short-term debt.

Suggested Citation

Araujo, Aloisio Pessoa de and Ferreira, Rafael de Vasconcelos Xavier and Funchal, Bruno, The Brazilian Bankruptcy Law Experiment (October 2, 2010). Available at SSRN: https://ssrn.com/abstract=1686370 or http://dx.doi.org/10.2139/ssrn.1686370

Aloisio Pessoa de Araujo

Getulio Vargas Foundation (FGV) - Escola de Pos-Graduacao (EPGE) and IMPA ( email )

R. Dr. Neto de Araujo 320 cj 1307
Rio de Janeiro, Rio de Janeiro 22250-900
Brazil

Rafael de Vasconcelos Xavier Ferreira

Getulio Vargas Foundation (FGV) - FGV/EPGE Escola Brasileira de Economia e Finanças ( email )

Praia de Botafogo 190/1125, CEP
Rio de Janeiro RJ 22253-900
Brazil

Bruno Funchal (Contact Author)

FUCAPE Business School ( email )

Fernando Ferrari Avenue 1358
Goiabeiras
Vitória, Espirtio Santo 29075-010
Brazil

Getulio Vargas Foundation (FGV) - Escola de Pos-Graduacao (EPGE) ( email )

R. Dr. Neto de Araujo 320 cj 1307
Rio de Janeiro, Rio de Janeiro 22250-900
Brazil

Register to save articles to
your library

Register

Paper statistics

Downloads
58
Abstract Views
774
rank
191,322
PlumX Metrics