The Economic Consequences of Bankruptcy Reform

• 成果类型: Article
• 署名作者: Gross, Tal; Kluender, Raymond; Liu, Feng; Notowidigdo, Matthew J.; Wang, Jialan
• 署名单位: Boston University; Harvard University; University of Chicago; University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20191311
• 发表日期: 2021
• 页码: 2309-2341
• 关键词: Consumer bankruptcy; credit; COMPETITION; MARKET; selection; defaults; implicit; BEHAVIOR; COSTS; debt

摘要

A more generous consumer bankruptcy system provides greater insurance against financial risks but may also raise the cost of credit. We study this trade-off using the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which increased the costs of filing for bankruptcy. We identify the effects of BAPCPA on borrowing costs using variation in the effects of the reform across credit scores. We find that a one-percentage-point reduction in bankruptcy filing risk decreased credit card interest rates by 70-90 basis points. Conversely, BAPCPA reduced the insurance value of bankruptcy, with uninsured hospitalizations 70 percent less likely to obtain bank-ruptcy relief after the reform.