A Theory of Zombie Lending

2021 ◽  
Author(s):  
YUNZHI HU ◽  
FELIPE VARAS
Keyword(s):  
Zombie Lending

Misallocation of Investment in Europe

2018 ◽  
Author(s):  
Francesca Barbiero ◽  
Philipp-Bastian Brutscher ◽  
Atanas Kolev ◽  
Alexander Popov ◽  
Marcin Wolski
Keyword(s):  
Agency Problems ◽  
Growth Opportunities ◽  
Data Set ◽  
European Firm ◽  
Weak Evidence ◽  
Zombie Lending ◽  
Matched Data ◽  
Global Growth

Using a pan-European, firm-bank matched data set, we find weak evidence of investment misallocation in Europe. Firms with higher debt overhangs invest significantly less, in particular in sectors that are facing good global growth opportunities. We also find that firms with higher debt overhangs are more likely to invest if they borrow from undercapitalized banks, and this effect is particularly strong in industries facing good global growth opportunities, suggesting a misallocation of investment associated with ‘zombie lending’. Our results are consistent with theories of investment misallocation due to agency problems at firms and at banks.

scholarly journals Zombie Lending and Depressed Restructuring in Japan

2008 ◽  
Vol 98 (5) ◽  
pp. 1943-1977 ◽  
Author(s):  
Ricardo J Caballero ◽  
Takeo Hoshi ◽  
Anil K Kashyap
Keyword(s):  
Market Share ◽  
Employment Growth ◽  
Job Creation ◽  
Firm Level ◽  
Competitive Process ◽  
Lower Productivity ◽  
Zombie Lending ◽  
Job Creation And Destruction ◽  
Productivity Gap

Large Japanese banks often engaged in sham loan restructurings that kept credit flowing to otherwise insolvent borrowers (which we call zombies). We examine the implications of suppressing the normal competitive process whereby the zombies would shed workers and lose market share. The congestion created by the zombies reduces the profits for healthy firms, which discourages their entry and investment. We confirm that zombie-dominated industries exhibit more depressed job creation and destruction, and lower productivity. We present firm-level regressions showing that the increase in zombies depressed the investment and employment growth of non-zombies and widened the productivity gap between zombies and non-zombies. (JEL G21, G32, L25)

Zombie Lending and Policy Traps

2021 ◽  
Author(s):  
Viral V. Acharya ◽  
Simone Lenzu ◽  
Olivier Wang
Keyword(s):  
Zombie Lending

Bank Specialization and Zombie Lending

2021 ◽  
Author(s):  
Olivier De Jonghe ◽  
Klaas Mulier ◽  
Ilia Samarin
Keyword(s):  
Zombie Lending

Distressed firms, zombie firms and zombie lending: a taxonomy

2021 ◽  
Author(s):  
Laura Álvarez Román ◽  
Miguel Garcia-Posada ◽  
Sergio Mayordomo
Keyword(s):  
Distressed Firms ◽  
Zombie Lending

scholarly journals Zombie Lending and Depressed Restructuring in Japan

2006 ◽  
Author(s):  
Ricardo Caballero ◽  
Takeo Hoshi ◽  
Anil Kashyap
Keyword(s):  
Zombie Lending

Bank Cleanups, Capitalization, and Lending: Evidence from India

2020 ◽  
Author(s):  
Yakshup Chopra ◽  
Krishnamurthy Subramanian ◽  
Prasanna L Tantri
Keyword(s):  
Information Asymmetry ◽  
Risk Shifting ◽  
Real Economy ◽  
Economic Stability ◽  
The Real ◽  
Quality Review ◽  
Shadow Banks ◽  
Zombie Lending ◽  
Asset Quality ◽  
The Impact

Abstract We examine the Indian bank asset quality review, which doubled the declared loan delinquency rate. Relative economic stability during the exercise and the absence of a capital backstop together make it unique. We find that the expected reduction in information asymmetry does not automatically lead to the recapitalization of banks by markets. The consequent undercapitalization leads to underinvestment and risk-shifting through zombie lending. The impact flows to the real economy through borrowers, including shadow banks, and adversely impacts growth. These findings show that bank cleanup exercises not accompanied by policies aimed at recapitalization may be insufficient even during normal times.

scholarly journals Preventing Zombie Lending

2013 ◽  
Vol 27 (3) ◽  
pp. 923-956 ◽  
Author(s):  
Max Bruche ◽  
Gerard Llobet
Keyword(s):  
Zombie Lending
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