Banking Investigate

Bankruptcy Regimes During Financial Distress

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Executive Summary

A question frequently asked at the onset of economic crises is whether the existing bankruptcy regimes can adequately deal with the increase in corporate and bank failures. This paper describes how bankruptcy reforms developed, what bankruptcy regimes aim to achieve, how they achieve their goals in normal times, and what options policy makers have resorted to in previous systemic crises. It also provides a menu of choices on what policymakers can do in terms of bankruptcy reforms to alleviate the current crisis.

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