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Zombie Firms, Firm-Bank Relationship and Spillover

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  • Baki Cem Sahin

Abstract

[EN] The debates surrounding zombie firms have been reinvigorated by the implementation of support programs to mitigate the effects of the COVID-19 pandemic. Zombie lending poses threats to the economy by distorting the efficient allocation of resources and diminishing overall production capacity. Furthermore, zombie lending raises financial stability risks. This study delves into zombie lending, with particular interest in how it evolves and its effects in Turkiye. The findings reveal important outcomes. Firstly, the ratio of zombie firms in Turkiye has decreased after the COVID-19 pandemic subsequent to reaching its peak in 2020. Secondly, main creditor banks have been less inclined to cut credit lines to financially distressed firms, and this may have contributed to zombification. Lastly, zombie firms exert negative spillover to other firms. These findings emphasize that the challenges posed by zombie lending should be addressed to ensure the efficient allocation of resources, strengthen production, and safeguard financial stability. [TR] COViD-19 pandemisinin etkilerini azaltmaya yonelik destek programlariyla zombi firmalara iliskin tartismalar yeniden canlanmistir. Zombi krediler kaynaklarin verimli dagilimini bozarak ve ekonomideki uretim kapasitesini azaltarak ekonomiye tehdit olusturmaktadir. Ayrica zombi krediler finansal istikrara yonelik riskleri artirmaktadir. Bu calisma, zombi kredileri Turkiye'deki gelisimi ve etkileri ozelinde incelemektedir. Bulgular onemli sonuclar ortaya koymaktadir. Oncelikle, Turkiye'deki zombi firmalarin orani COVID-19 pandemisi sonrasinda 2020'de zirveye ulastiktan sonra azalmistir. Ikinci olarak, ana bankalar mali sikinti icindeki firmalara kredi kisitlamasini daha az uygulamis ve bu zombilesmeye katkida bulunmus olabilir. Son olarak, zombi firmalar diger firmalar uzerinde olumsuz etkiye sahiptir. Bu bulgular, kaynaklarin etkin dagilimini saglamak, uretimi artirmak ve finansal istikrari korumak icin zombi kredilerin ortaya cikardigi zorluklarin ele alinmasi gerektigini vurgulamaktadir.

Suggested Citation

  • Baki Cem Sahin, 2024. "Zombie Firms, Firm-Bank Relationship and Spillover," CBT Research Notes in Economics 2410, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:econot:2410
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    References listed on IDEAS

    as
    1. Abraham,Facundo & Cortina Lorente,Juan Jose & Schmukler,Sergio L., 2020. "Growth of Global Corporate Debt : Main Facts and Policy Challenges," Policy Research Working Paper Series 9394, The World Bank.
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