Zombie-lending in the United States prevalence versus relevance

• Author(s): Göbel, Maximilian ; Tavares, Nuno
• Date: 2022
• Persistent ID: http://hdl.handle.net/10400.5/24432
• Origin: Repositório da Universidade de Lisboa
• Subject(s): zombie lending; business dynamism; bank credit; non-viable firms; productivity
• Document Type: Working paper
• Language: English
• Contributor(s): Repositório Científico de Acesso Aberto da ULisboa

Description

Extraordinary fiscal and monetary interventions in response to the COVID-19 pandemic have revived concerns abou tzombie prevalence in advanced economies.The literature has already linked this phenomenon {observed over the course of the last two decades {to impeding the performance of healthy firms in Japan and Europe.To make the case for the United States, we analyze banks' and capital markets'zombie-lending practices on the basis of a sample of publicly listed U.S.companies.Our results suggest that zombie prevalence and zombie-lending perse are notade defining characteristic of the U.S.economy.Nevertheless,we find evidence for negative spillovers of zombie-lending on productivity, capital-growth,and employment-growth of non-zombies as well as on overall business dynamism. It is predominantly the class of healthy small-and medium-sized companies that is sensitive to zombie-lending activities,with financial constraints further amplifying these effects.