Bankruptcy Helping Business

With title like Entrepreneurship and the Barrier to Exit:How Does an Entrepreneur-Friendly Bankruptcy Law Affect Entrepreneurship Development at a Societal Level? it has to be written by professors and not even law professors but a pair of business professors. The following might entice you to overlook the title:

The authors find that a lenient, entrepreneur friendly bankruptcy law encourages entrepreneurs to take risks and thus lets entrepreneurship prosper. This risk-taking can generate variety in the economy by increasing the number of firms with high growth potential, which may lead to more entrepreneurship and economic development—in short, failure may be good for the economy. The study pushes for a more informed understanding of how formal institutions governing bankruptcy matter for entrepreneurial behavior and outcomes. It emphasizes that a society that is not willing to absorb the “pain” of having a large number of entrepreneurial failures, via an entrepreneurfriendly bankruptcy law, is not likely to reap the “gain” of vibrant entrepreneurship development and economic growth.