Do Bankruptcy Codes Matter? A Study of Defaults in France, Germany, and the U.K.

  • Author(s): SERGEI A. DAVYDENKO, JULIAN R. FRANKS
  • Published: Apr 01, 2008
  • Pages: 565-608
  • DOI: 10.1111/j.1540-6261.2008.01325.x

ABSTRACT

Using a sample of small firms that defaulted on their bank debt in France, Germany, and the United Kingdom, we find that large differences in creditors' rights across countries lead banks to adjust their lending and reorganization practices to mitigate costly aspects of bankruptcy law. In particular, French banks respond to a creditor‐unfriendly code by requiring more collateral than lenders elsewhere, and by relying on collateral forms that minimize the statutory dilution of their claims in bankruptcy. Despite such adjustments, bank recovery rates in default remain sharply different across the three countries, reflecting very different levels of creditor protection.

Jump to menu

Main Navigation

Search the Site / Journal

Search Keywords

Search Tips

Members' Login

Credentials

Members' Options

Site Footer

View Mobile Version