Abstract:

In 1898, the U.S. introduced its first permanent federal bankruptcy act that (1) offered all U.S. debtors a full debt discharge upon surrendering their assets and (2) gave creditors the right to seize all assets in case of attempted fraud. The act affected both individuals and small or medium sized enterprises. Some states had preexisting laws covering one or both elements. We use this to estimate the effect of the 1898 Act on (independent) patenting. We find that both elements of the law stimulated patenting, but only if the assets exempted in bankruptcy were limited. Results suggest that providing (limited) risk-sharing and penalizing fraud are both important to stimulate risky business activities and innovation.

General information:

Attendance to this seminar is possible by invitation only. Please send an e-mail to finsec-abs@uva.nl if your are interested in attending this seminar.