Bankrupt in America

"In Bankrupt in America, Mary and Brad Hansen show that examination of how Americans have used bankruptcy law and the history of the law itself offers important perspective on the history of bankruptcy in America. Using new statistical and documentary evidence, they illustrate the cycles of interaction between bankruptcy law's use and its own evolution. The authors first offer a broad overview of the laws at various levels governing the collection of debt and position their research in the literature on bankruptcy. They establish the need for a framework that integrates various lines of thought, and introduce of the methods of their approach, which incorporates new institutional economics and cliometrics, that is, the incorporation of econometric data analysis. They then illustrate the general path to bankruptcy by discussing the series of decisions that creditors and debtors make at every stage and how various formal and informal institutions influence these decisions. The core of the book will comprise a generally chronological narrative from 1898, when the first major federal bankruptcy law was enacted to an end point of 2005. Hansen and Hansen reach novel conclusions about causes and consequences of bankruptcy and raise nuances in the relationship between bankruptcy rates and economic growth. For instance, while higher bankruptcy rates are usually considered a negative, the authors show that higher bankruptcy may actually signal economic growth if it is due to an expansion of credit markets. Further, the authors contribute to our understanding of what drives differences in bankruptcy rates among states by illustrating the influence of the broader legal framework. Ultimately, this work find that long-run growth in personal bankruptcy is the result of growth in credit and that the study of legal governance provides useful viewpoints from which to draw out patterns in bankruptcy"--