Are insolvent firms being kept afloat by excessively low interest rates?
Remy Lecat (),
Benjamin Bureau and
Jean-Pierre Villetelle ()
Authors registered in the RePEc Author Service: Charles O'Donnell
Rue de la Banque, 2016, issue 29
Since the crisis, interest rates on bank loans to firms have fallen sharply, but have also become more widely dispersed. This indicates that banks are discriminating more in the credit market on the basis of borrower risk. Lending to struggling firms at low interest rates remains rare. This tends to suggest there has been no significant rise in zombie lending, i.e. the provision of loans at artificially low interest rates to help keep otherwise insolvent companies afloat.
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Working Paper: Are insolvent firms being kept afloat by excessively low interest rates? (2016)
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