Changes in New Zealand’s Business Insolvency Rates after the Global Financial Crisis

25 Pages Posted: 25 Nov 2019

See all articles by Viv B. Hall

Viv B. Hall

affiliation not provided to SSRN

John McDermott

Motu Economic and Public Policy Research Trust

Date Written: August 1, 2019

Abstract

We examine the question of whether the rate of business insolvencies in New Zealand is related to overall macroeconomic conditions. In particular, our interest is in whether the rate of business insolvencies changed in the wake of the Global Financial Crisis (GFC). We find that there was a large increase in insolvencies in New Zealand following the onset of the GFC in 2008. We also find that the timing of the change did not occur uniformly over the country but occurred at different times in four key regional centres. Sharply rising relative costs were the most important macroeconomic factor influencing corporate insolvencies in New Zealand, Auckland, Waikato and Wellington, but have been immaterial in determining New Zealand’s total personal insolvencies. It is employment growth and house price inflation that have been significant in explaining total personal insolvencies.

Keywords: Bankruptcy, business cycles, structural breaks, New Zealand, Global Financial Crisis

JEL Classification: G33, E32, R11

Suggested Citation

Hall, Viv B. and McDermott, John, Changes in New Zealand’s Business Insolvency Rates after the Global Financial Crisis (August 1, 2019). Available at SSRN: https://ssrn.com/abstract=3477074 or http://dx.doi.org/10.2139/ssrn.3477074

Viv B. Hall

affiliation not provided to SSRN

No Address Available

John McDermott (Contact Author)

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

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