Changes in Personal Bankruptcy Protection Laws: The Impact on Bank Lending to Small Businesses

45 Pages Posted: 6 Oct 2018 Last revised: 30 Jan 2019

See all articles by Jason Damm

Jason Damm

Florida Atlantic University

Masim Suleymanov

Florida Atlantic University

Rebel A. Cole

Florida Atlantic University

Date Written: January 11, 2019

Abstract

In the U.S., individual parties who file for bankruptcy can exempt a certain dollar amount of property from creditor liquidation during the debt settlement process. We examine the effect of changes to these protection laws on bank lending to small businesses. Our results indicate that additional debtor protection, brought about by changes to bankruptcy laws, significantly reduces the amount of credit issued by banks to small businesses. We find that this impact is more severe for small businesses located in census tracts with low income levels and that our results are largely driven by lending in urban areas.

Keywords: Bank lending to small businesses; Bankruptcy exemption laws; Debtor protection

JEL Classification: G32, G33, K35, M10

Suggested Citation

Damm, Jason and Suleymanov, Masim and Cole, Rebel A., Changes in Personal Bankruptcy Protection Laws: The Impact on Bank Lending to Small Businesses (January 11, 2019). Available at SSRN: https://ssrn.com/abstract=3247930 or http://dx.doi.org/10.2139/ssrn.3247930

Jason Damm (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States
(941) 587-9425 (Phone)

Masim Suleymanov

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

Rebel A. Cole

Florida Atlantic University ( email )

College of Business
777 Glades Road
Boca Raton, FL 33431
United States
1-561-297-4969 (Phone)

HOME PAGE: http://rebelcole.com

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