The Economic Impact of Rescue and Recovery Frameworks in the EU

Author (Person) , , , ,
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Series Details Number 004
Publication Date 04/09/2015
ISBN 978-92-79-48664-7
ISSN 2443-8022
EC KC-BD-15-004-EN-N
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This paper provides empirical support to the important role of efficient pre-insolvency frameworks in fostering a culture of early restructuring and second chances in EU Member States and the positive impact that this has on entrepreneurship, as well as the timeliness and cost of corporate and household deleveraging. The analysis is based on a set of composite indicators measuring specific efficiency aspects of rescue and recovery frameworks. These were built using principal component analysis applied on a comparison of the legal provisions they encompass. Econometric analysis carried out on the basis of these indicators suggests that, across the EU, efficient pre-insolvency frameworks are positively associated with relatively higher levels of entrepreneurship and deleveraging episodes with a relatively milder impact on financial stability and economic activity.

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