## Bankruptcy Technology, Finance, and Entrepreneurship

_IMF Working Papers, August 10, 2017_

## Source details

**Canonical URL:** [Bankruptcy Technology, Finance, and Entrepreneurship](https://www.imf.org/en/publications/wp/issues/2017/08/10/bankruptcy-technology-finance-and-entrepreneurship-45094)

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## Bibliographic details
- Authors: Nelson Sobrinho
- Published: August 10, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484314210.001

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### Summary
- Author: Nelson Sobrinho
- Publication date: August 10, 2017
- Paper type: IMF Working Papers, Working Paper No. 2017/188
- Central finding: Using an overlapping-generations growth model featuring financial intermediation, inefficiencies in bankruptcy technology and obstacles to entrepreneurship have significant negative effects on income per capita and welfare in developing countries.
- Interaction effect: These inefficiencies may interact in perverse ways, further amplifying the negative effects in the long run.
- Policy rationale: Strong rationale for structural reforms that simultaneously speed up resolution of private sector insolvency, improve creditor protection, and eliminate obstacles to entrepreneurship.

### Model and approach
- Framework: Overlapping-generations growth model featuring financial intermediation.
- Key mechanisms studied:
  - Inefficiencies in technology to deal with private debt distress (bankruptcy technology).
  - Obstacles to entrepreneurship (high costs of doing business).
- Outcome measures: Income per capita and welfare of developing countries.

### Main findings
- Bankruptcy technology inefficiencies have significant negative effects on income per capita.
- High costs of doing business (obstacles to entrepreneurship) significantly reduce welfare and income per capita.
- The interaction between poor bankruptcy technology and entrepreneurship obstacles can amplify long-run negative outcomes.

### Policy recommendations
- Speed up the resolution of private sector insolvency.
- Improve creditor protection.
- Eliminate obstacles to entrepreneurship.
- Implement structural reforms that address bankruptcy technology and entrepreneurship barriers simultaneously.

### Subject and keywords
- Subject: Consumption, Credit, Loans, Self-employment, Technology
- Keywords: cost of capital, rate of return, WP

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## Content in this bundle

- **Bankruptcy Technology, Finance and Entrepreneurship, WP/17/188, August 2017**
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_Source: https://www.imf.org/en/publications/wp/issues/2017/08/10/bankruptcy-technology-finance-and-entrepreneurship-45094_