The seminar will be held in the Visitor Centre at 3:15 pm
Astrid A. Dick (INSEAD)
Abstract
We document a link between U.S. credit supply and rising personal bankruptcy rates. We exploit the exogenous variation in market contestability brought on by banking deregulation - the relaxation of entry restrictions in the 1980s and 1990s - at the state level. We nd deregulation explains at least 10% of the rise in bankruptcy
rates. We also nd that deregulation leads to increased lending, lower loss rates on loans, and higher lending productivity. Our ndings indicate that increased competition prompted banks to adopt sophisticated credit rating technology, allowing for new credit extension to existing and previously excluded households.