Increasing personal bankruptcy protection raises consumers' desire to borrow and lenders' cost of extending credit; the impact on equilibrium borrowing is ambiguous. Using bankruptcy protection changes between 1999 and 2005 across U.S. states, we find that borrowers respond to greater protection...

Over time, companies have faced many crises that have impacted their capacity to remain operational in the market. When going through periods of financial distress, companies must find solutions to face the risks and to fulfill the going concern assumption, which is an essential principle in...

In recent decades, the importance of transport and logistics companies has increased considerably, especially for Lithuania, where this sector is on the rise and creating benefits for various users. Therefore, this study aims to analyse the economic-financial situation of transport and logistics...

While many employees risk losing their job and having their career disrupted due to employers' financial distress, it is widely recognized that many leave their employer in anticipation of layoff. In this paper, we assess how employee costs of financial distress depend on employees learning and...

We combine the Decennial Census, credit reports, and administrative earnings to create the first panel dataset linking parent's credit access to the labor market outcomes of children in the U.S.We find that a 10% increase in parent's unused revolving credit during their children's adolescence...

We analyze how corporate reorganization and liquidation change labor reallocation during bankruptcy using randomized judge assignments and linked Portuguese employer-employee and firm data. Reorganization reduces the negative effect of bankruptcy on employee earnings, even with most workers...

This study tests the connectionbetween corporate governance structures and firm value, incorporating financial distress as a mediating mechanism among construction companies listed in ASEAN markets. Utilizing a sample of 58 firms drawn from an initial population of 169 companies over the...

We use a novel data set containing all corporate loans throughout the Eurozone to document a series of novel stylized facts on the relationship between collateral and the probability of default. First, we show that the pervasive empirical finding that riskier borrowers pledge collateral is...

The Financial Lobster Bias describes how SMEs, driven by distorted liquidity perceptions, engage in aggressive expansion until financial breakdown occurs. Using data from 10,412 Spanish SMEs (2000-2024), this study shows that liquidity misperception-measured through two versions of the Liquidity...

Conventional credit risk models understate tail risk by centering on mean default probabilities and neglecting distributional and sectoral heterogeneity. We propose a Quantile Probability of Default (QPD) framework based on unconditional quantile regressions estimated on flow default rates from...

Interpretability analysis methods, such as LIME and SHAP, are widely employed to explain the predictions of artificial intelligence models; however, they primarily function as post hoc tools and do not directly quantify the intrinsic interpretability of the models. Although it is commonly...

We investigate how the use of bankruptcy as an implicit health insurance varies across households, focusing on heterogeneity by asset holdings, race, marital status, and educational attainment. Using a difference-in-differences design based on the 2005 bankruptcy reform, we find that the reform...

Existing research on financial distress typically treats failure as a single event and pays limited attention to the dynamic dependence between recurrent distress episodes. Ignoring such dependence can lead to biased hazard estimates and weaker predictive performance. We propose a...

This note reviews empirical evidence on the impacts of insolvency regimes on entrepreneurship, access to credit, preservation of viable businesses and jobs, and other variables contributing to economic development. Its objective is to provide policy makers with evidence to guide insolvency...

Nowadays, the European economy faces significant global challenges that threaten the continuity of economic growth, especially in the German manufacturing sector, which is under strain from financial turmoil, resulting in numerous layoffs and firm closures. In this respect, FinTech significantly...

This article provides a novel insight into whether earnings manipulation signals are reflected in banks' internal credit risk estimates, as measured by the probability of default (PD) estimates, and whether such manipulation has an impact on credit risk (point in time or deferred). The...

Small and Medium-sized Enterprises (SMEs) are the backbone of the European economy. However, the impact of nature-related risks on SME creditworthiness is still largely unexplored. To address this gap, we incorporate indicators of nature-related risks - namely the Biodiversity Intactness Index,...

Bankruptcy prediction is currently a widely researched topic, as it typically results from a chain of negative events. Logistic Regression (LR) is one of the standard prediction tools; however, with advances in technology, machine learning (ML) methods are gaining prominence and demonstrating...

The study's objective is to check whether the predictive power of Machine Learning Techniques is better than Logistic Regression in predicting the bankruptcy of firms and that the same predictive power of ascertaining bankruptcy improves when a proxy for uncertainty is added to the model as a...

Predicting bankruptcy within selected industries is crucial because of the potential ripple effects and unique characteristics of those industries. It serves as a risk management tool, guiding various stakeholders in making decisions. While artificial intelligence (AI) has shown high success...

Insolvency proceedings are strategic for the competitiveness of a national economy. The new law, but also new financial situation of organizations affect the new normal of insolvency framework. In Europe, standards aimed at creating an efficient framework for corporate insolvency resolution are...

We develop a two-stage game in which competing airlines first choose the networks of markets to serve in the first stage before competing in price in the second stage. Spillovers in entry decisions across markets are allowed, which accrue on the demand, marginal cost, and fixed cost sides. We...

The track record of Swiss publicly listed companies in creating economic value is assessed, along with their propensity to experience corporate distress. This assessment is conducted both in absolute terms and relative to foreign peers for the years 2005 to 2022. Established measures of...

Limitations on or total prohibition of usury (or interest) have been a pervasive theme across religions and ancient societies. Since medieval times, two major institutional changes relating to non-performance of debt contracts have taken place, namely, the abolition of slavery and the evolution...

The paper examines the use of various machine learning algorithms for the task of forecasting the company’s bankruptcy based on financial indicators. Different approaches to the formation of the data set on which the models are trained are compared, in particular, data balancing methods. Nine...