Consumer bankruptcy: decision, choice and access to credit afterwards

Gumus, A ORCID: https://orcid.org/0000-0003-0200-2627, Kara, A, Ahmad, AH and Glass, K, 2023. Consumer bankruptcy: decision, choice and access to credit afterwards. International Journal of Finance and Economics. ISSN 1076-9307

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Abstract

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 reorganization 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.

Item Type:	Journal article
Publication Title:	International Journal of Finance and Economics
Creators:	Gumus, A., Kara, A., Ahmad, A.H. and Glass, K.
Publisher:	Wiley
Date:	25 July 2023
ISSN:	1076-9307
Identifiers:	Number Type 10.1002/ijfe.2859 DOI 1809837 Other
Rights:	This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
Divisions:	Schools > Nottingham Business School
Record created by:	Jonathan Gallacher
Date Added:	04 Oct 2023 15:28
Last Modified:	04 Oct 2023 15:28
URI:	https://irep.ntu.ac.uk/id/eprint/49853

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