The share of companies entering insolvency has risen sharply over the past couple of years to be at the
top of the range observed in the 2010s, but on a cumulative basis remain slightly below their
pre-pandemic trend. The rise has been due to challenging economic conditions and a catch-up effect from
exceptionally low insolvencies during the pandemic. Financial stability risks, though, remain contained
because most insolvent firms are small with little debt, many have a chance of recovery, and indirect
effects on financial stability via job losses have been limited.
This Focus Topic examines the characteristics of firms that have recently entered insolvency, the…
