1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Design of insolvency regimes across countries

This paper explores cross-country differences in the design of insolvency regimes, based

on quantitative indicators constructed from countries’ responses to a recent OECD policy

questionnaire. The indicators – which are available for 36 countries for 2010 and 2016 –

aim to better capture the key design features of insolvency which impact the timely

initiation and resolution of personal and corporate insolvency proceedings. According to

these metrics, the design of insolvency regimes varies significantly across countries, with

important differences emerging with respect to the treatment of failed entrepreneurs, the

availability of preventative and streamlining tools and ease of corporate restructuring.

While a comparison of indicator values for 2010 and 2016 imply that recent reform

efforts have improved policy design, there remains much scope to reform insolvency

regimes in many OECD countries. This is particularly significant in light of

complementary analysis which shows that the design of insolvency regimes is relevant

for understanding three inter-related sources of contemporary labour productivity

weakness: the survival of “zombie” firms, capital misallocation and stalling technological

diffusion.

English

Keywords: zombie firms, personal and corporate insolvency, productivity, capital misallocation, firm exit
JEL: D24: Microeconomics / Production and Organizations / Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity; K35: Law and Economics / Other Substantive Areas of Law / Personal Bankruptcy Law; O43: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Institutions and Growth; O47: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence; O40: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Economic Growth and Aggregate Productivity: General
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