News: Seminari

Seminar by Marco Ghitti

ore 12.00 Sala Seminari – I° piano, Palazzo Levi Cases, Via del Santo 33

16.03.2018

Great Expectations? Bankruptcy Law Reforms and Bank Credit for SMEs

Seminar by Marco Ghitti, Bocconi University and Edhec Business School

Abstract

A series of Italian Bankruptcy Law reforms, originally aiming to facilitate debt renegotiation and business continuation as a response to the crisis, allows us to disentangle how a change of creditor rights affects Bank Credit Market for SMEs. We exploit a novel credit level dataset on bank credit, with more than 6.4 million pooled observations. By constructing a new Creditor Rights Index across all bankruptcy proceedings available for SMEs, we find that reforms weakening creditor rights increase interest rates and reduce amount of credit available, causing credit rationing. Effects of the reforms are not equally distributed, but are stronger for riskier firms and unsecured credits. Results highlight that regulation may have unintended consequences, if not properly designed.