Journal of Financial and Quantitative Analysis Vol. 53 No. 2 2018
Quiet Life No More? Corporate Bankruptcy and Bank Competition
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 data set 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 toward 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.
- DOI
- 10.1017/s0022109017001090
- Volume
- 53
- Issue
- 2
- Pages
- 581-611
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref