A lot of small businesses close down and start up again. In had a try and will try again. There is no stigma attached. In the same article, they cite of the work of Bee Yan Aw, Xiaomin Chen and Mark Roberts who found that the ease of entry and exit in Taiwan helped boost productivity. What appears to be the reason for Taiwan's success in reallocating capital is more a matter of some size than law.
Smaller companies have two advantages in reallocating capital.
First they can be far more flexible in adapting to changed circumstances. Second and more importantly, smaller companies limit both of the exposure and relationship between the debtor and the creditor. Some of these articles are referenced in Professor Roubini of New York University Stern School of Business Administration Asia Crises Home Page and in the Providence Journal - Commentary Section .