Causes: business related

Statistics and commentary on the causes of business related personal insolvencies.

Business related causes of personal insolvencies

Economic conditions is the most common business related cause of personal insolvencies

In 2016–17, where a debtor cited a specific cause, the most common business related causes of debtors entering personal insolvencies were:

  • economic conditions (1,779 debtors)
  • personal reasons including ill health (471 debtors)
  • excessive drawings (310 debtors).

Economic conditions was the most common cause cited by debtors for entering a business related personal insolvency in every year from 2007–08 to 2016–17.

Business related causes of personal insolvencies, 2016–17

Economic conditions is the most common business related cause of all types of personal insolvency

Where a cause could be identified, economic conditions was the most common business related cause of debtors entering a:

  • business related bankruptcy or personal insolvency agreement in every financial year since 2007–08, and
  • debt agreement in most years since 2009–10.

The most common business related causes of personal insolvencies are similar for all states and territories

In 2016–17, the most common cause cited by debtors entering business related personal insolvencies in all states and territories was economic conditions, where a cause was cited. In all states and territories but one, the second most common cause cited was personal reasons including ill health. The exception was the Australian Capital Territory, where the second most common cause was excessive drawings (comprising just four debtors).

Most common business related causes* by state and territory, 2016–17

State or territory Most common business related cause Number of new debtors % total new debtors in a business related personal insolvency
New South Wales Economic conditions 350 26.0%
Australian Capital Territory Economic conditions 21 30.4%
Victoria Economic conditions 328 29.1%
Queensland Economic conditions 585 33.5%
South Australia Economic conditions 98 31.3%
Northern Territory Economic conditions 18 31.0%
Western Australia Economic conditions 334 39.1%
Tasmania Economic conditions 33 32.0%
Australia** Economic conditions 1,779 31.4%

*Where we could identify a cause.

**Includes other and unknown state or territory.

Most debtors entering business related personal insolvencies are male

In 2016–17, more men than women cited all business related causes of personal insolvency. The causes with the highest sex ratio (that is, the ratio of men to women in the debtor population) were gambling or speculation (7.0) and inability to collect debts (6.6). In total, 2.5 times more men than women entered new business-related personal insolvencies.

Business related causes by sex, 2016–17*

Main business related cause of personal insolvency Number of male debtors Number of female debtors
Economic conditions 1,232 547
Personal reasons, including ill health 301 167
Excessive drawings 256 53
Lack of business ability 201 82
Excessive interest 152 72
Lack of capital 109 46
Failure to keep proper books 92 21
Inability to collect debts 93 14
Gambling or speculation 49 7
Seasonal conditions 21 8
Other business reason 1,524 613
Total 4,030 1,630

*Excludes records where debtors did not disclose their sex.

The median age of debtors entering business related personal insolvencies varies by cause

In 2016–17, those who cited the cause seasonal conditions had the highest median age (50 years) of debtors entering new business related personal insolvencies. Those who cited lack of business ability had the lowest median age of 41 years. The median age of all new debtors entering business related personal insolvencies was 45.

Median debtor age, business related causes, 2016–17

Main business related cause of personal insolvency Median age of new debtors*, 2016–17 (years)
Seasonal conditions 50
Gambling or speculation 49
Economic conditions 46
Excessive drawings 45
Excessive interest 44
Failure to keep proper books 44
Inability to collect debts 44
Lack of capital 44
Personal reasons, including ill health 44
Lack of business ability 41
Total 45

*Where an age was recorded

Full report

For the full business related personal insolvency causes report see business causes time series.

CSV