How Can FinTech Reduce Corporate Zombification Risk?

Long Jin, Changchun Pan, Yan Li and Xinmiao Liu

Emerging Markets Finance and Trade, 2022, vol. 58, issue 15, 4350-4360

Abstract: Based on data from China’s A-share listed companies from 2011 to 2018, in this paper, we examine the impact of FinTech on corporate zombification risk. We find that FinTech can reduce corporate zombification risk; for each unit increase in FinTech, the probability of a company becoming a zombie firm decreases by 7.8%. In addition, FinTech can reduce corporate zombification risk by improving the efficiency of bank credit and government subsidies. Furthermore, the breadth of FinTech coverage and the depth of application can reduce corporate zombification risk, but the degree of digitization fails to play a role. Finally, not only can FinTech reduce corporate zombification risk, but it can also inhibit the contagion effect of zombie firms in the industry.

Date: 2022
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DOI: 10.1080/1540496X.2022.2078698

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