Year: 2004
Type: article
Study design: Observational Study
Abstract: Federal law mandates the removal of personal bankruptcies from credit reports after 10 years. The removal’s effect is market efficiency in reverse. The short-term effect is a spurious boost in apparent creditworthiness, especially for the more creditworthy bankrupts, delivering a substantial increase in both credit scores and the number and aggregate limit of bank cards. The longer-term effect is lower scores and higher delinquency than initial full-information scores predict. These findings relate to both the debate over the bankruptcy code and the wisdom of influencing market clearing by removing information.
Source: The Journal of Business
DOI: 10.1086/422437
Author: David K. Musto
Institution: University of Pennsylvania
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2071402736