Comment on ‘Proposal for a new bankruptcy procedure in emerging markets’ by Hart et al.

Abstract

A growing consensus among economists, lawyers, and corporate executives is that the existing bankruptcy procedures in the advanced economies (e.g. the USA) are flawed, and there have been numerous calls for the reform of these procedures. As a consequence, emerging economies, which need to codify entirely new bankruptcy procedures, cannot rely on outright importation of the existing procedures from the advanced economies. This problem actually parallels the view that emerging economies, which would import the banking regulatory systems, such as the defective deposit insurance system of the US, would risk financial instability. Consequently, we should welcome attempts to propose new bankruptcy procedures for emerging markets from scratch. The paper by Hart et al. just does that. The authors should be commended for such a bold task.