Dan Andrews, Filippos Petroulakis, 04 April 2019

Europe’s productivity problem is partly due to the rise of zombie firms that crowd out growth opportunities for others. This column explores the tendency for weak banks to evergreen loans to zombie firms to avoid realising losses on their balance sheet. Measures to strengthen bank balance sheets will be enhanced by insolvency regimes that encourage corporate restructuring.

Stephen Cecchetti, Kim Schoenholtz, 03 November 2017

Black Monday has been referred to as the first contemporary global financial crisis. This column reviews key aspects of the 1987 crash and discusses the subsequent steps taken to improve the resilience of the financial system. It also highlights a key lingering vulnerability – the lack of a mechanism for managing the insolvency of critical payment, clearing, and settlement institutions.

Paul McGhee, Julio Suarez, Gary Simmons, 29 April 2016

The European Commission aims to propose new legislative on business insolvency by the end of 2016. This column presents new research that seeks to quantify the impact of improving EU-wide insolvency regimes. It suggests that improving insolvency regimes could reduce corporate bond spreads by 18 to 37 basis points, expand EU GDP by 0.3% to 0.55% over the long term, and increase employment by 0.6 to 1.2 million new jobs. A number of proposals for targeted harmonisation are also outlined. 

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