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Monetary policy, financial development and the financing of zombie firms: evidence from China

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  • Liping Lu
  • Xiaoyang Li
  • Zongxin Qian

Abstract

This paper examines the financing channels for zombie firms in China. We find that equity markets and suppliers provide substantial financing support for zombie firms, while banks and other financing channels are less important. We also find that the amount of investment does not increase accordingly after zombie firms obtain external financing, which indicates an inefficient use of funds by these zombie firms. Our results are robust to various definitions of zombie firms, and also to a propensity score matching method.

Suggested Citation

  • Liping Lu & Xiaoyang Li & Zongxin Qian, 2020. "Monetary policy, financial development and the financing of zombie firms: evidence from China," Economic and Political Studies, Taylor & Francis Journals, vol. 8(2), pages 141-164, April.
    • Handle: RePEc:taf:repsxx:v:8:y:2020:i:2:p:141-164
    DOI: 10.1080/20954816.2020.1730542
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    Cited by:

    1. Deng Ming & Wang Jinbo, 2022. "Why do zombie firms seldom die or resurrect? The effect of government subsidies on the survival duration of China’s zombie firms," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 16(1), pages 212-228, January.

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