The Rise and Fall of Entrepreneurs: An Empirical Study of Individual Bankruptcy Petitioners in Israel

Abstract

This Article addresses two fundamental areas of inquiry in personal bankruptcy. First, it examines what conditions justify an expansive vs. stringent bankruptcy debt relief regime in a given country. Second, the article examines what contributes to the particular profile composition of individuals in bankruptcy. The author hypothesizes that the scope of the fresh-start policy and the composition of the bankruptcy population in a given country is predicated on government's predisposition towards credit deregulation, the extent of the welfare state and the standards employed by financial institutions when extending credit to the private sector. To test this hypothesis, the author has undertaken an empirical study of consumer bankruptcy filings in Israel examining the characteristics of the petitioners and the causes of filings. By comparing the findings of this undertaking with the results of similar empirical studies in the United States and Canada, this Article provides strong support for the suggested three-prong hypothesis.