Not only does the legal framework around insolvency vary between countries, but also the frequency with which it is used. In 2019, the country with the most business insolvencies was France, whose 52,100 insolvencies was just over twice that of the next-highest country, the United States. The United Kingdom was third with only slightly less insolvencies than the U.S. -- despite the massive difference in the size of these economies. Differences in the level of insolvencies between countries are a result of both economic and institutional factors. For example, the number of business insolvencies in China has grown dramatically in recent years, increasing almost fourfold since 2015 to reach 12,750 in 2019. While this increase is due in part to the growth of corporate debt in China over this period, it also reflects changes made to bankruptcy processes. In 2007, the Chinese bankruptcy code was overhauled, and specialized courts for bankruptcy proceedings were established between 2007 and 2017. Prior to this, bankruptcy cases were handled by local courts, which lacked the resources, expertise, and incentives to resolve cases in a timely manner.
Bankruptcy growth trends over the last decade also differ greatly between countries. While some countries have seen their number of bankruptcies decrease following a spike from the financial crisis of 2008/09, other countries have seen their number of insolvencies increase over the last decade. The United States and Japan are examples of the former trend, while Turkey and South Africa are examples of the latter. A greater level of consistency is found across countries when considering bankruptcies in terms of industry though, with the personal services, construction, and retail sectors tending to experience the highest number of bankruptcies. This pattern holds for most developed countries, being evident in economies as diverse as Canada, Belgium, and Japan. However, a different picture emerges from developing economies, with professional services having the highest instance of business liquidations in South Africa, while this dubious honor goes to the manufacturing sector in India.
Divergence between countries are also likely to be seen with how the coronavirus pandemic (COVID-19) affects global business bankruptcy rates. Given that many countries have restricted trading for many businesses in the personal services and retail sectors (owing to their dependence on face-to-face contact), and that these sectors have consistently high bankruptcy rates, the global pandemic may greatly increase the number of bankruptcies in these sectors. Moreover, the broader economic uncertainty created by the crisis will likely depress consumer confidence, increasing the likelihood of bankruptcies across all industries. However, many countries have also offered unprecedented levels financial support to businesses, which may partially mitigate the worst effects of the crisis in some countries. In addition, countries have been affected differently by the crisis, meaning those countries able to safely ease trading restrictions sooner may see a lower rise in their bankruptcy rates.