The Influence of Zombie Enterprises on Quantity and Quality of Entrepreneurship: Does Banking Competition Matter

Xiangmin He, Shenrun Yan and Jingyun Miao

SAGE Open, 2024, vol. 14, issue 3, 21582440241271199

Abstract: Entrepreneurship plays a pivotal role in driving economic development and social progress. In contrast to existing literature that primarily focuses on the impact of zombie enterprises on innovation, resource distortion, and environmental pollution, this study aims to investigate the influence of zombie enterprises on entrepreneurship by utilizing data from prefecture cities in China. Additionally, we explore how banking competition moderates this relationship. Employing the system GMM estimator, our findings reveal that zombie enterprises significantly hampers urban entrepreneurship quantity and diminishes entrepreneurship quality. Furthermore, the inhibitory effect of zombie enterprises on entrepreneurship quality is greater than that of entrepreneurship quantity. In addition, we observe that state-owned zombie enterprises have a more pronounced negative impact compared to private zombie enterprises. Notably, banking competition exhibits a nonlinear moderating effect on the association between zombie firms and entrepreneurship; joint-stock banks and city commercial banks play prominent roles in shaping this effect. Threshold model regression analysis confirms these nonlinear effects. Overall, our conclusions offer important policy implications for accelerating the disposal of zombie firms as well as enhancing entrepreneurship quantity /quality to promote high-quality urban development.

Keywords: zombie enterprises; entrepreneurship quantity; entrepreneurship quality; banking competition (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:14:y:2024:i:3:p:21582440241271199

DOI: 10.1177/21582440241271199

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