A panel study of zombie SMEs in Japan: Identification, borrowing and investment behavior

Kentaro Imai

Journal of the Japanese and International Economies, 2016, vol. 39, issue C, 91-107

Abstract: Utilizing 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 4–13% of SMEs were zombie firms during the period 1999–2008. The estimation of the borrowing function reveals that SME zombie firms did not change their loans in response to a change in land values due to evergreening. We also observe that the profitability of investment, measured by marginal q, did not have positive effects on investments of zombie firms. This indicates that investment increase resulting from evergreen loans was not necessarily productive or profitable.

Keywords: Zombie firms; Evergreening; SMEs; Borrowing; Investment (search for similar items in EconPapers)
JEL-codes: E22 E44 G21 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (51)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:39:y:2016:i:c:p:91-107

DOI: 10.1016/j.jjie.2015.12.001

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