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| Author: | Elimam, A. A. Girgis, M. Kotob, S. |
| Title: | The use of linear programming in disentangling the bankruptcies of al-Manakh stock market crash |
| Journal: | Operations Research
1996 : SEP-OCT, VOL. 44:5, p. 665-676 |
| Index terms: | BANKRUPTCY STOCK MARKETS LINEAR PROGRAMMING |
| Language: | eng |
| Abstract: | A highly speculative parallel stock market, called Souk al-Manakh, emerged in Kuwait in 1980-81. Due to the absence of checks and balances, the default of one trader led to the collapse of al-Manakh in 1982. The crash precipitated an economic recession, business failures, and more bankruptcies among traders. In this paper a linear programming model is presented to disentangle the bankruptcies of al-Manakh's insolvents. It identified solvent from insolvent traders, determined their debt settlement ratios, and set a fair and equitable distribution of debtor's mixed assets to their respective creditors. The paper demonstrates the special properties of the LP model and its relationship to a system of linear equations through a numeric example. Also the legal, financial, and economic controversies are presented. |
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