PROFILING BANKRUPTS AMONG SOLE PROPRIETORS IN MALAYSIA POST-COVID: A CONCEPTUAL PAPER
DOI:
https://doi.org/10.55197/qjssh.v7si4.1663Keywords:
insolvency, debt management, financial instability, financial planningAbstract
This conceptual study examines the factors contributing to bankruptcy among sole proprietors in Malaysia in the post-COVID-19 period. Sole proprietors face heightened financial vulnerability due to limited capital reserves, unstable cash flows, inadequate financial planning, poor debt management, and the unlimited liability structure that exposes personal assets to business obligations. The study proposes quantitative descriptive analysis and cluster analysis to identify patterns, similarities, and differences among bankrupt sole proprietors and develop meaningful bankruptcy profiles. Purposive sampling is proposed to select relevant sole proprietors who can provide appropriate information for the analysis. The study highlights financial literacy, financial management skills, liquidity management, and strategic planning as important factors in reducing insolvency risk. By identifying distinct profiles of bankrupt sole proprietors, the study aims to support targeted financial education, early intervention, debt management assistance, and institutional policy measures that strengthen entrepreneurial resilience and improve the long-term financial sustainability of sole proprietors in Malaysia.
References
[1] Al-Mutawakkil, F.L., Purnomo, M., Maulina, E. (2020): A scoping review of financial themes in entrepreneurial orientation. – Russian Journal of Agricultural and Socio-Economic Sciences 98(2): 85-100.
[2] Alshebami, A.S., Murad, M. (2022): The moderation effect of entrepreneurial resilience on the relationship between financial literacy and sustainable performance. – Frontiers in Psychology 13: 12p.
[3] Amirludin, A.A., Jaafar, M.N., Ambad, S.N.A. (2024): A conceptual framework of the retirement savings behavior among civil servants in Malaysia. – Information Management and Business Review 16(3(I)S): 328-343.
[4] Azman, A.B., Majid, M.A.A. (2023): Role of family and survival strategies of micro-family food business during COVID-19 pandemic. – Journal of Tourism and Services 14(26): 153-172.
[5] Bakar, M.Z.A., Ayub, S.H., Hamzah, M.R., Bakar, S.A. (2020): Financial education as a moderating influence in prudent financial management practices among Malaysian youth. – International Journal of Academic Research in Business and Social Sciences 10(13): 20-29.
[6] Brackertz, N. (2014): The impact of financial counselling on alleviating financial stress in low income households: A national Australian empirical study. – Social Policy and Society 13(3): 389-407.
[7] Bushe, B. (2019): The causes and impact of business failure among small to micro and medium enterprises in South Africa. – Africa’s Public Service Delivery and Performance Review 7(1): 1-26.
[8] Carter, R., Van Auken, H. (2006): Small firm bankruptcy. – Journal of Small Business Management 44(4): 493-512.
[9] Charfeddine, L., Umlai, M.I., El-Masri, M. (2024): Impact of financial literacy, perceived access to finance, ICT use, and digitization on credit constraints: Evidence from Qatari MSME importers. – Financial Innovation 10(1): 1-37.
[10] Fahmi, F., Nst, A.U., Shifah, L., Sugianto, S. (2025): Perencanaan keuangan untuk mengurangi risiko kebangkrutan: Pentingnya pengelolaan keuangan, pencatatan yang baik, dan strategi pengelolaan arus kas. – Harmoni Sosial 2(1): 76-84.
[11] Garla, S., Chakraborty, G., Gaeth, G. (2012): Mining and text analytics comparison of k-means, normal mixtures and probabilistic-d clustering for B2B segmentation using customers’ perceptions. – SAS Global Forum 8p.
[12] Hussain, J., Salia, S., Karim, A.H. (2018): Is knowledge that powerful? Financial literacy and access to finance. – Journal of Small Business and Enterprise Development 25(6): 985-1003.
[13] Ilias, I.I., Azizi, N.N.H., Rahman, N.A., Mahali, M. (2023): Financial solace: Malaysian Credit Counselling and Debt Management Agency responses to COVID-19 challenges. – Emerging Science Journal 7: 145-162.
[14] Ilias, I.I., Mahali, M., Azizi, N.N.H., Rahman, N.A., Abdullah, S.M. (2024): Turning the tide: Holistic approaches to reducing overindebtedness in Malaysia. – International Journal of Research and Innovation in Social Science 8(10): 506-523.
[15] Kaban, M. (2024a): Understanding financial management as a determining factor for the success of MSMEs: A qualitative study. – Journal of Multidisciplinary Academic Business Studies 2(1): 241-250.
[16] Kaban, M. (2024b): Understanding financial management as a determining factor for the success of MSMEs: A qualitative study. – International Journal of Accounting and Management Information Systems 2(1): 51-60.
[17] Khan, K.A., Dankiewicz, R., Kliuchnikava, Y., Oláh, J. (2020): How do entrepreneurs feel bankruptcy? – International Journal of Entrepreneurial Knowledge 8(1): 89-101.
[18] Lau, W.Y., Ke, G.N., Yip, T.M., Wong, R.M.M., Kamal, K.A., Lee, S.C., Carter, S., Khairudin, R., Grajfoner, D. (2024): Socioeconomic impact and sufficiency of government financial support during COVID-19 pandemic: A retrospective study. – PLoS ONE 19(5): 1-18.
[19] Liew, X.T., Yusoff, M.E. (2023): The role of Islamic microfinance institution in women micro-entrepreneurs sustainability during COVID-19 in Johor. – Open Journal of Business and Management 11(5): 2321-2342.
[20] Loke, Y.J. (2017): Financial vulnerability of working adults in Malaysia. – Contemporary Economics 11(2): 205-218.
[21] Mariam, S., Putra, A.H.P.K., Ramli, A.H., Aryani, F. (2023): Analysis of the effect of debt level, market orientation, and financial literacy on microenterprise financial performance: The mediating role of consumer behavior. – ATESTASI: Jurnal Ilmiah Akuntansi 6(2): 469-494.
[22] Mohamed Sadique, R.B., Musman, M., Muda, S. (2025): Financial literacy in sole proprietorship: The entity concept. – Buletin FPN S3 9: 8-9.
[23] Molosiwa, T., Holland, J. (2025): The impact of financial literacy on the performance of Small and Medium-sized Enterprises (SMEs): A review of literature. – International Journal of Research in Business and Social Science 14(3): 320-332.
[24] Mross, E., Reiter, L. (2019): Partners in financial literacy: Outreach to student entrepreneurs. – College & Research Libraries News 80(10): 575-575.
[25] Muñoz-Céspedes, E., Ibar-Alonso, R., Mir, M.C. (2024): Individual entrepreneurial behavior and financial literacy. – International Entrepreneurship and Management Journal 20(3): 2263-2285.
[26] Nadir, M., Alam, S., Ali, M.J., Rahim, F.R. (2026): Financial literacy and SME financial distress studies: A systematic literature review. – Multidisciplinary Reviews 9(2): 1-7.
[27] Napoleon, D., Pavalakodi, S. (2011): A new method for dimensionality reduction using k-means clustering algorithm for high dimensional data set. – International Journal of Computer Applications 13(7): 41-46.
[28] Nkwinika, E., Akinola, S. (2023): The importance of financial management in small and medium-sized enterprises (SMEs): An analysis of challenges and best practices. – Technology Audit and Production Reserves 5: 12-20.
[29] Nor, S.H.S., Ismail, S., Wah, Y.B. (2024): Personal bankruptcy prediction using logistic regression model. – Information Management and Business Review 16(3S(I)): 366-378.
[30] Omar, A.R.C., Ishak, S., Jusoh, M.A. (2020): The impact of COVID-19 Movement Control Order on SMEs’ businesses and survival strategies. – Geografia-Malaysian Journal of Society and Space 16(2): 90-103.
[31] Paseková, M., Fišerová, Z., Bařinová, D. (2016): Bankruptcy in Czech Republic – from the perspectives of debtors, creditors, and the judiciary, 2008-2013. – Journal of International Studies 9(1): 180-191.
[32] Pawenang, S., Al-Shami, S.A., Wijaya, A. (2024): Empowering SMEs through digital financial literacy: Enhancing resilience, innovation, and inclusivity in Malaysia. – International Journal of Academic Research in Accounting, Finance and Management Sciences 14(4): 813-819.
[33] Rupali, Gupta, G. (2013): Data mining: Techniques, applications and issues. – International Journal of Advanced Research in Computer Science and Electronics Engineering 2(2): 220-223.
[34] Sari, Y.W., Nugroho, M., Rahmiyati, N. (2023): The effect of financial knowledge, financial behavior and digital financial capabilities on financial inclusion, financial concern and performance in MSMEs in East Java. – Uncertain Supply Chain Management 11(4): 1745-1758.
[35] Sekaran, U., Bougie, R. (2016): Research methods for business: A skill-building approach. – John Wiley & Sons, Chichester 448p.
[36] Souza, V.A.D. (2026): Educação financeira como ferramenta de gestão em empreendimentos de pequeno porte. – RCMOS - Revista Científica Multidisciplinar O Saber 1(1): 1-10.
[37] Subagyo, S., Suhendra, E.S., Ernestivita, G. (2023): Digital transformation, marketing, business size, financial literation on SMEs’ competitive advantage. – Trikonomika 22(2): 100-107.
[38] Urefe, O., Odonkor, T.N., Chiekezie, N.R., Agu, E.E. (2024): Enhancing small business success through financial literacy and education. – Magna Scientia Advanced Research and Reviews 11(2): 297-315.
[39] Wahyundaru, S.D., Putra, W., Wibowo, M., Ivada, E., Nurastuti, P., Sasongko, C.D., Choiri, M.M., Yuzaria, D. (2024): Linking the role of e-commerce and financial literacy on MSME’s sustainability performance during the digital era. – International Journal of Data and Network Science 8(4): 2651-2662.
[40] Wise, S. (2013): The impact of financial literacy on new venture survival. – International Journal of Business and Management 8(23): 30-39.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 SHARIFAH HERYATI SYED NOR, NURUL WAJHI AHMAD, KHALID ABDULLAH
This work is licensed under a Creative Commons Attribution 4.0 International License.
