Quarterly Journal of Economics Vol. 112 No. 1 1997
Personal Bankruptcy and Credit Supply and Demand
Abstract
This paper examines how personal bankruptcy and bankruptcy exemptions affect the supply and demand for credit. While generous state-level bankruptcy exemptions are probably viewed by most policy-makers as benefiting less-well-off borrowers, our results using data from the 1983 Survey of Consumer Finances suggest that they increase the amount of credit held by high-asset households and reduce the availability and amount of credit to low-asset households, conditioning on observable characteristics. Thus, bankruptcy exemptions redistribute credit toward borrowers with high assets. Interest rates on automobile loans for low-asset households also appear to be higher in high exemption states.
- DOI
- 10.1162/003355397555172
- Volume
- 112
- Issue
- 1
- Pages
- 217-251
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref