A Panel Study of Zombie SMEs in Japan: Identification, Borrowing and Investment Behavior

Kentaro Imai ()
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Kentaro Imai: Graduate School of Economics, Osaka University

No 13-16-Rev., Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: Using a panel dataset of firms for the period 1999-2008, we estimated the prevalence of zombies among Japanese Small- and Medium-sized enterprises (SMEs) and their borrowing and investment behaviors. We observe that 4-14% of SMEs were zombie firms during the period 1999-2008. Analysis of borrowing behavior indicates that zombie firms could not reduce their loans. Reductions in the land values of SMEs did not lead to a decrease in the borrowing of zombie firms due to ever-greening. We also observe that the profitability of investment, measured by marginal q, did not increase investment among zombie firms because evergreen loans increased investment in less productive and profitable projects.

Keywords: zombie firms; ever-greening; SMEs; borrowing; investment (search for similar items in EconPapers)
JEL-codes: E22 E44 G21 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2013-07, Revised 2014-09
New Economics Papers: this item is included in nep-ent, nep-mac and nep-sbm
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