Policymakers strive to create legislation that promotes entrepreneurship, as it influences individuals’ propensity to start new ventures. While research extensively covers the effects of tax and interest policies on entrepreneurship, the impact of insolvency laws remains underexplored in law and economics scholarship. In our paper entitled “The flip side of the coin: how entrepreneurship‑oriented insolvency laws can complicate access to debt financing for growth firms”, we examine the changes in the use of debt for growth firms, using the recent reform of Belgian insolvency and company law in the 2017-2019 period as an exogenous policy shock (e.g. easier access to debt remission for natural persons, the new rule for demarcation of the assets of the bankrupt estate from art. XX.110, §3 and the ‘cheaper’ form of limited liability due to the introduction of the BV without a legal [minimum] capital).
What research tells us, and doesn’t tell us