TY  - JOUR
AU  - Gropp,Reint
AU  - Scholz,John Karl
AU  - White,Michelle
TI  - Personal Bankruptcy and Credit Supply and Demand
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5653
PY  - 1996
Y2  - July 1996
UR  - http://www.nber.org/papers/w5653
L1  - http://www.nber.org/papers/w5653.pdf
N1  - Author contact info:
Reint Gropp
Department of Finance, Accounting and Real Estate
European Business School
Rheinstrasse 1
65375 Oestrich-Winkel
Germany
Tel: +49-172-6324838
E-Mail: Reint.Gropp@ebs.edu

John Karl Scholz
University of Wisconsin - Madison
Department of Economics
1180 Observatory Drive
Madison, WI 53706
Tel: 608/262-5380
Fax: 608/263-3876
E-Mail: jkscholz@facstaff.wisc.edu

Michelle J. White
Department of Economics
University of California, San Diego
La Jolla, CA  92093-0508
Tel: 858/534-2783
Fax: 858/534-7040
E-Mail: miwhite@ucsd.edu
AB  - This paper examines how personal bankruptcy and bankruptcy exemptions affect the supply and demand for credit.  While generous state-level bankruptcy exemptions are probably viewed by most policymakers as benefitting less-well-off borrowers, our results using data from the 1983 Survey of Consumer Finances suggest they increase the amount of credit held by high-asset households and reduce the availability and amount of credit to low-asset households, conditioning on observable characteristics. We also find evidence that interest rates on automobile loans for low-asset households are higher in high exemption states.  Thus, bankruptcy exemptions redistribute credit toward borrowers with high assets.
ER  -