by the Association for Financial Markets in Europe (Afme) has
highlighted the economic advantages of harmonising insolvency
laws across the continent.
Advising the European Commission on its consultation, the
authors explain that today's framework discourages cross-border
investment and the timely restructuring of viable companies,
gives creditors little certainty on recovery rates, and puts
small and medium-sized enterprises (SMEs) at a
"We found the quality of the
insolvency regime to have a clear and statistically robust
effect on the cost of corporate credit across the EU," said
Paul McGhee, director of strategy at Afme.
Improving insolvency recovery rates across the bloc would
reduce corporate bond spreads by 18 basis points, according to
the report. These lower risk premiums would translate to up to
a 0.55% in GDP across the EU.
It also makes the point that a better, more homogenous
regime would assist in tackling the high...