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Insolvency in selected OECD countries: Outcomes and regulations

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Insolvency in Selected OECD Countries: Outcomes and Regulations CESifo DICE Report 1/200627 Forum INSOLVENCY IN SELECTED OECD COUNTRIES: OUTCOMES AND REGULATIONS RIGMAR OSTERKAMP* This article describes levels and long-term trends of business and individual insolvency in a country-com- parative perspective. The developments are inter- preted with respect to the characteristics (and the existence) of statutory insolvency rules. Long-term developments of insolvencies Figure 1 depicts the long-term development of all in- solvencies, business and personal.The countries select- ed are those for which longer-term data exist and where the reported data differentiate between cases of business and personal insolvency. In order to make meaningful comparisons, the raw data on insolvencies must be normalised. Such a normalisation may take in- to account different country specificities, like popula- tion, number of businesses or average business size in terms of employees. Throughout the article the num- ber of insolvencies is related to one million inhabitants. All countries show fluctuations and a more or less pronounced upward trend. The exception is Sweden where only a (strong) fluctuation but not an upward trend is visible.The insolvency figures for the US and Canada are not only much higher than they are for the other countries, but they also seem to exhibit a higher growth dynamic. The latter is not the case, however, as the compound annual growth rates are highest by far for Germany (9.6 percent), while the other countries rank between 4.3 percent (Canada, with the lowest) and 6.4 percent (Australia). Business insolvencies Figure 1 comprises two quite different cases of insol- vency, those of businesses and of individuals, and, thus, may not be too meaningful. Figure 2 is only about business insolvency. Sweden is a remarkable case, exhibiting a virtual eruption and later a strong decrease in business insolvencies between 1988 and 1998. Next to Sweden is France, with a lon

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