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Resolving insolvency: Measuring the strength of insolvency laws

Author: Doing Business
Publication: Doing Business 2015
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Overview

  • Doing Business introduces a new component of the resolving insolvency indicator set this year, the strength of insolvency framework index. This indicator tests whether each economy has adopted internationally recognized good practices in the area of insolvency.
  • The good practices underlying the new indicator are based on 2 sources—the World Bank’s Principles for Effective Insolvency and Creditor/Debtor Regimes and the United Nations Commission on International Trade Law’s Legislative Guide on Insolvency Law.
  • OECD high-income economies have the highest average score on the strength of insolvency framework index. South Asia is the region with the lowest average score on the index.
  • Economies that have reformed their insolvency laws in the past several years score substantially higher on the strength of insolvency framework index than economies with outdated insolvency provisions.
  • Economies with better insolvency laws as measured by Doing Business tend to have more credit available to the private sector.