Causes and consequences of corporate failure in Morocco: A state of the art

Causes et conséquences de la défaillance des entreprises marocaines: Un état de l’art

Ilyasse Ech-Chafi () and EL Hassane Ait Ali
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Ilyasse Ech-Chafi: UH2C - Université Hassan II de Casablanca = University of Hassan II Casablanca = جامعة الحسن الثاني (ar)
EL Hassane Ait Ali: UH2C - Université Hassan II de Casablanca = University of Hassan II Casablanca = جامعة الحسن الثاني (ar)

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Abstract: A lot of research has focused on business failure in Morocco. Businesses are very important for the country's economy as they create jobs and contribute to economic growth. According to an Inforisk study from 2023, the number of defaulted businesses increased by 28% in the first half of 2023, reaching about 3,830. Very small businesses (VSEs) are the most vulnerable to bankruptcy, with a rate of 98.8%, while small and medium-sized enterprises (SMEs) and large companies have very low bankruptcy rates, at 1.1% and 0.1% respectively. This article aims to assess business failure by explaining the concept, outlining the causes, and highlighting the consequences. We will use a method based on in-depth analysis of existing literature to gather relevant information on business failure. The results of this study show that business failure is caused by many internal and external factors. Internal causes include ineffective resource management, inadequate financial planning, cash flow problems, and lack of innovation. External causes include economic instability, fierce competition, and fluctuating exchange rates. The consequences of failure are wide-ranging, leading to major job losses and decreased investor confidence. Bankruptcy also has negative impacts on the physical and mental health of managers. In conclusion, this study emphasizes the importance of establishing a preventive framework for insolvency, based on better governance, more flexible financing, and informed public policy, to enhance the resilience of Moroccan companies to economic shocks.

Keywords: Business failure; bankruptcy; causes; consequences; failure; Défaillance d'entreprises; faillite; conséquences; échec (search for similar items in EconPapers)
Date: 2024
Note: View the original document on HAL open archive server: https://hal.science/hal-04804340v1
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Published in African Scientific Journal, 2024, 3 (27), pp.0094-0107. ⟨10.5281/zenodo.14221142⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04804340

DOI: 10.5281/zenodo.14221142

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