Of course that reflects the fact that more recently the cash rate has been close to its effective lower bound. In both cases, the initial expansion in the balance sheet was in the order of 5 per cent of GDP. But in the current episode, the nature of the expansion has been quite different compared with the GFC.
The direct effect of fiscal injections to the SME sector will be to lower this “financial distress” rate, particularly so in the case of SMEs carrying bank debt. However, even when all supports are factored in, around one-in-six SMEs are likely to be financially distressed into 2021 as a result of the effects of the pandemic.