An Economic Analysis of Bankruptcy Statutes, Economic Inquiry
Personal bankruptcy statutes are analyzed as social insurance agreements. The risk-sharing and incentive effects resulting from changes in bankruptcy laws are studied. It is shown that increasing the leniency of bankruptcy statutes may have unambiguous short-term benefits to potential bankrupts, but may be detrimental in the long-run.
Dye, A. Ronald. 1986. An Economic Analysis of Bankruptcy Statutes. Economic Inquiry. 24(3): 417-428.