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

Viv Hall and Christopher McDermott

No 19_15, Working Papers from Motu Economic and Public Policy Research

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 (search for similar items in EconPapers)
JEL-codes: E32 G33 R11 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2019-08
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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