Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in the paper are those of the authors and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors. Terms of use: Documents in EconStor may Seismic Effects of the Bankruptcy Reform AbstractWe argue that the 2005 bankruptcy abuse reform (BAR) contributed to the surge in subprime foreclosures that followed its passage. Before BAR, over-indebted mortgagors could free up income to pay the mortgage by filing bankruptcy and having their unsecured debts discharged. BAR blocks that maneuver for better-off filers by way of a means test. We identify the effects of BAR using state home equity bankruptcy exemptions; filers in low-exemption states were not very protected before BAR, so they would be less affected by the reform. Difference-in-difference regressions confirm four predictions implied by that identification strategy. Our findings add to research trying to explain the surge in subprime foreclosures and to a broader literature on household bankruptcy demand and credit supply. We buttress the identification by looking for differential effects of BAR across different classes of household credit. We expect BAR will reduce delinquency rates on unsecured loans in states with high exemptions because lenders in those states were most exposed to loss under bankruptcy before BAR. 3 We figure BAR will be unrelated to prime mortgage foreclosures because prime mortgagors are, by definition, unlikely to demand bankruptcy, regardless of exemptions.We test those predictions using difference-in-difference regressions of mortgage foreclosure and loan delinquency rates estimated with state level, quarterly data over 1998:Q1 to 2007:Q3. The results are largely consistent with our predictions. Given home price appreciation and economic conditions, we find that the increase in subprime foreclosures after BAR was significantly higher in states with higher exemption. Prime foreclosure rates, by contrast, were unrelated to BAR. In still starker contrast, delinquency rates on unsecured personal loans decreased more post-BAR in states with higher home equity exemptions.The estimated impact of BAR on subprime foreclosures is substantial. For a state with average home equity exemption, the av...

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This paper studies bank learning through repeated interactions with borrowers from a new perspective. To understand learning by lending, we adapt a methodology from labor economics to analyze how loan contract terms evolve as banks acquire new information about borrowers. We construct "proxy" variables for this information using data from borrowers' out-of-sample, future credit performance. Due to the timing of their construction, banks could not have used these variables directly to price loans. We nonetheless find that these proxies increasingly predict loan prices as relationships progress, even after controlling for possible omitted variable bias. Our methodology provides strong evidence that: (a) bank learning affects loan prices, and (b) relationship benefits are heterogeneous. In particular, higher quality borrowers face differentially lower spreads as their relationship with lenders develop -and banks learn about their quality -while lower quality borrowers see loan prices increase and their loan amounts fall. We further find suggestive evidence that banks incorporate CEO-specific information into loan prices.

US productivity growth experienced continued productivity growth after 2000 even as investment, particularly in information technology (IT), slowed. This paper uses industry-level data to examine the link between average labor productivity (ALP) growth and IT in the post-2000 period. We use difference-in-difference and cross-sectional regressions to show that the link between ALP growth and IT-intensity is weaker after 2000 than before. These results are robust to alternative measures of IT-intensity such as the IT share of capital services, the level of IT capital depth, and the share of IT capital services in total output. We conclude that the post-2000 productivity gains in the United States do not appear to have been driven directly by IT. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2007.

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