The
COVID-19 pandemic has disrupted economic activity and sharply reduced
the revenue of Australian businesses. The number of businesses that fail in
this episode will depend on a range of factors, including the size of individual
businesses’ cash buffers just prior to the pandemic, the decline in their
revenue during the downturn, their capacity to reduce operating expenses,
and the extent of support from both the Government and private lenders. This
Box explores how the risk of business failure in the non-financial sector
has evolved during the
pandemic.
Businesses failures are a key risk to the financial system for a…