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Zombies, Again? The COVID-19 Business Support Programs in Japan

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Listed:
  • Takeo Hoshi

    (University of Tokyo)

  • Daiji Kawaguchi

    (University of Tokyo)

  • Kenichi Ueda

    (University of Tokyo)

Abstract

We designed and conducted a firm-level survey on the use of COVID-19-related government programs, in collaboration with Tokyo Shoko Research, LTD (TSR). Combining the survey results with the financial statements of the respondent firms, we investigated the factors behind the allocation of various government programs. We find that firms that had low credit scores before the COVID-19 pandemic were more likely to apply for and receive the subsidies and concessional loans offered by the Japanese government in 2020. Firms with low credit scores are not necessarily zombies, which are defined to be the firms that are non-viable but kept alive by assistance from creditors and/or government. Our result suggests that the government assistance may have also subsidized some poorly performing firms that were not yet zombies before the pandemic.

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  • Takeo Hoshi & Daiji Kawaguchi & Kenichi Ueda, 2021. "Zombies, Again? The COVID-19 Business Support Programs in Japan," Bank of Japan Working Paper Series 21-E-15, Bank of Japan.
    • Handle: RePEc:boj:bojwps:wp21e15
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    Cited by:

    1. Li, Xinyu & Wang, Huacheng & Li, Rong, 2023. "A hidden channel of “blood transfusion”: Internal capital market subsidies and zombie firms," The British Accounting Review, Elsevier, vol. 55(6).
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    3. Linlin Fan & Tingfeng Tang & Gongyan Yang, 2023. "Administrative reform and the disposal of zombie enterprises: evidence from China," Small Business Economics, Springer, vol. 61(4), pages 1845-1869, December.
    4. Telegdy, Álmos, 2024. "The effects of enterprise relief grants during COVID-19," Economics Letters, Elsevier, vol. 234(C).
    5. TSURUTA Daisuke, 2024. "Determinants and Consequences of Bank Borrowings of Small Businesses: Is the COVID-19 crisis special?," Discussion papers 24007, Research Institute of Economy, Trade and Industry (RIETI).
    6. Haimann, Michael & Kaserer, Christoph & Ljubicic, Kristian, 2023. "Cui bono? Large-scale evidence on the impact of COVID-19 policy measures on listed firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 89(C), pages 228-243.
    7. Tomoyuki Yagi & Kakuho Furukawa & Jouchi Nakajima, 2022. "Productivity Trends in Japan - Reviewing Recent Facts and the Prospects for the Post-COVID-19 Era -," Bank of Japan Working Paper Series 22-E-10, Bank of Japan.
    8. Chakrabarti, Prasenjit & Kaur, Jasmeet, 2024. "Zombie-lending during the pandemic in India: Did the Central Bank reduce credit misallocation concerns of forbearance?," Journal of Policy Modeling, Elsevier, vol. 46(1), pages 153-170.
    9. Nakamura, Jun-ichi, 2023. "A 50-year history of “zombie firms” in Japan: How banks and shareholders have been involved in corporate bailouts?," Japan and the World Economy, Elsevier, vol. 66(C).
    10. HONDA Tomohito & ONO Arito & UESUGI Iichiro & YASUDA Yukihiro, 2023. "Anatomy of Out-of-court Debt Workouts for SMEs," Discussion papers 23088, Research Institute of Economy, Trade and Industry (RIETI).
    11. HONJO, Yuji & IWAKI, Yunosuke & KATO, Masatoshi, 2024. "Outside or inside the firm? The impact of debt financing on the exit routes of start-up firms," TDB-CAREE Discussion Paper Series E-2023-02, Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy, Graduate School of Economics, Hitotsubashi University.
    12. Shen, Yu & Ren, Meixu & Zhao, Jingmei, 2023. "Bank competition and zombie company: Empirical evidence from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 297-318.
    13. Ren, Meixu & Zhao, Jinxuan & Zhao, Jingmei, 2023. "The crowding-out effect of zombie companies on fixed asset investment: Evidence from China," Research in International Business and Finance, Elsevier, vol. 65(C).
    14. TSURUTA Daisuke, 2023. "Credit Allocation and Public Credit Guarantee Schemes for Small Businesses: Evidence from Japan," Discussion papers 23083, Research Institute of Economy, Trade and Industry (RIETI).
    15. Kleimeier, Stefanie & Hoffmann, Arvid O.I. & Broihanne, Marie-Hélène & Plotkina, Daria & Göritz, Anja S., 2023. "Determinants of individuals’ objective and subjective financial fragility during the COVID-19 pandemic," Journal of Banking & Finance, Elsevier, vol. 153(C).

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