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Int J Fin Econ - 2023 - Gumus - Consumer bankruptcy Decision choice and access to credit afterwards.pdf (1.7 MB)

Consumer bankruptcy: decision, choice and access to credit afterwards

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posted on 2023-07-25, 16:15 authored by Atilla Gumus, Alper Kara, Ahmad Hassan AhmadAhmad Hassan Ahmad, Karligash GlassKarligash Glass

We examine the effects of the bankruptcy benefit and adverse events on the consumer bankruptcy decision. Employing zero-inflated ordered probit models and a unique longitudinal survey of approximately 66,000 individuals in Great Britain, we find that consumers are more likely to enter into bankruptcy proceedings when the bankruptcy benefit increases and when they become unemployed. We find that the effects of adverse events differ across bankruptcy types. Individuals who experience the onset of health problems are more likely to choose reorganisation of debts (i.e., income gleaning), whereas individuals who get divorced or separated are more likely to prefer the discharge of debts (i.e., fresh start). We also examine access to credit after bankruptcy. We find that individuals are excluded from the credit markets post-bankruptcy and the impact differs across bankruptcy types. Credit exclusion for fresh starters is dramatic, swift but short-lived, while for income gleaners, it is gradual, slow but lasts longer.

History

School

  • Loughborough Business School

Department

  • Business
  • Economics

Published in

International Journal of Finance and Economics

Publisher

Wiley

Version

  • VoR (Version of Record)

Rights holder

© The Authors

Publisher statement

This is an Open Access Article. It is published by Wiley under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Licence (CC BY-NC-ND). Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Acceptance date

2023-06-21

Publication date

2023-07-25

Copyright date

2023

ISSN

1076-9307

eISSN

1099-1158

Language

  • en

Depositor

Dr Ahmad Hassan Ahmad. Deposit date: 5 July 2023

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