Benjamin Charles Iverson
Benjamin Iverson is a PhD student in the Business Economics program at Harvard Business School and the Harvard Economics Department. He received a B.A. in economics from Brigham Young University in 2006, with a double-minor in mathematics and business. Prior to coming to Harvard, Ben worked as an Assistant Economist at the Federal Reserve Bank of New York, where he studied financial intermediaries. His research interests include corporate and consumer finance, with an emphasis on banking and financial distress.
Get in Line: Chapter 11 Restructuring in Crowded Bankruptcy Courts
This paper tests whether Chapter 11 restructuring outcomes are affected by time constraints in busy bankruptcy courts. On average, total bankruptcy filings rise by 32% during economic recessions, leaving bankruptcy judges with far less time per case exactly when financial distress is worst. Using the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005 as an exogenous shock that decreased caseloads dramatically, I estimate the impact of bankruptcy caseload changes on the outcomes of firms in Chapter 11. I find that as bankruptcy judges become busier they tend to become more pro-debtor, allowing more firms to reorganize and liquidating fewer firms. This is particularly true for larger firms. Firms that reorganize in busy courts spend longer in bankruptcy, while firms that are dismissed from busy courts are more likely to re-file for bankruptcy within three years of their original filing. In addition, busy courts impose costs on local banks, which report higher charge-offs on business lending when caseload increases. The economic magnitude of these effects is large: the average rise in judge caseload during an economic recession results in 27% more firms being reorganized, 47% higher charge-off rates, and doubles the share of dismissed firms that re-file for bankruptcy.
Insolvency and Bankruptcy;
The Ownership and Trading of Debt Claims in Chapter 11 Restructurings (with Victoria Ivashina and David Smith)
This paper explores a novel data set that identifies over 71,000 investors holding debt claims of 136 companies filing for U.S. Chapter 11 bankruptcy protection during the period of 1998 through 2009. We investigate how concentration in debt ownership relates to Chapter11 restructurings, and how claims trading during the restructuring influences ownership concentration. Consistent with theoretical work, we find that the overall concentration of debt ownership increases the speed with which a restructuring is completed, via both pre-filing prepack/ prearranged restructurings and traditional in-court proceedings. Increased concentration also leads to higher probability of a firm sale and lower probability of a liquidation. Our results indicate that concentration of debt ownership increases significantly over the course of the case. We establish that trading during the case, particularly via claims purchases by asset management firms and hedge funds, leads to higher concentration of ownership when a plan of reorganization is voted upon.
Full paper available on SSRN.
Can Gambling Increase Savings? Empirical Evidence on Prize-linked Savings Accounts
This paper studies whether prize-linked savings (PLS) accounts, which offer random, lottery-like payouts to account holders in lieu of risk-free interest, can aid individuals in increasing savings levels by adding the chance to “win big.” Using micro-level data from the third largest bank in South Africa, we show that PLS was attractive to a broad group of individuals across all age, race, and income levels. We find that financially constrained individuals and those with no other deposit accounts were particularly likely to open a PLS account. Participants in the PLS program increased their total savings on average by 1.1% of annual income, a 31% increase from the mean level of savings. Deposits in PLS did not cannibalize savings in standard savings products. Instead, PLS appears to act as a substitute for lottery gambling. We also present evidence that prize winners increase their investment in PLS, sometimes by more than the amount of the prize won, and that large prizes generate a local “buzz” which leads to a 11.6% increase in PLS demand at the winning branch.
Work in Progress
"Chapter 11 vs. Chapter 7 Bankruptcy: Impact on Asset Productivity" (with Shai Bernstein)
"The Externalities of Bankruptcy" (with Shai Bernstein)
"Bridge Loans as M&A Insurance Contracts" (with Victoria Ivashina)