The role of insurance and limited liability on corporate insolvencies

Camino Blasco, David

Publication:
The role of insurance and limited liability on corporate insolvencies

dc.affiliation.dpto	UC3M. Departamento de Economía de la Empresa	es
dc.contributor.author	Camino Blasco, David
dc.contributor.editor	Universidad Carlos III de Madrid. Departamento de Economía de la Empresa
dc.date.accessioned	2010-03-01T10:43:47Z
dc.date.available	2010-03-01T10:43:47Z
dc.date.issued	1995-01
dc.description.abstract	The current recession has been accompanied by an unprecedented rise in the incidence of default on loans and companies' insolvencies. This paper seeks to clarify the reasons for this level of default, relating them not only to the general economic conditions and the state of private sector balance sheets but also to a range of factors such as the role that limited liability and several forms of insurance contracts play in companies' failures. In particular, due to asymmetric information and 11 moral hazard 11 problems limited liability seems to favor insolvency. However, the use of credit insurance is likely to reduce the cost of capital and thus the probability of default, as insurance companies are better suited for screening and monitoring functions.
dc.format.mimetype	application/pdf
dc.identifier.uri	https://hdl.handle.net/10016/7072
dc.language.iso	eng
dc.relation.ispartofseries	UC3M Working papers. Business Economics
dc.relation.ispartofseries	95-03-02
dc.rights	Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.accessRights	open access
dc.rights.uri	http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.eciencia	Empresa
dc.subject.other	Corporate finance
dc.subject.other	Managerial accounting
dc.subject.other	Insolvencies
dc.subject.other	Limited liability
dc.subject.other	Credit insurance
dc.title	The role of insurance and limited liability on corporate insolvencies
dc.type	working paper	*
dspace.entity.type	Publication