Zombies, Again? The COVID-19 Business Support Programs in Japan

Takeo Hoshi, Daiji Kawaguchi and Kenichi Ueda

No 21-E-15, Bank of Japan Working Paper Series from Bank of Japan

Abstract: We designed and conducted a firm-level survey on the use of COVID-19-related government programs, in collaboration with Tokyo Shoko Research, LTD (TSR). Combining the survey results with the financial statements of the respondent firms, we investigated the factors behind the allocation of various government programs. We find that firms that had low credit scores before the COVID-19 pandemic were more likely to apply for and receive the subsidies and concessional loans offered by the Japanese government in 2020. Firms with low credit scores are not necessarily zombies, which are defined to be the firms that are non-viable but kept alive by assistance from creditors and/or government. Our result suggests that the government assistance may have also subsidized some poorly performing firms that were not yet zombies before the pandemic.

Date: 2021-12-30
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Journal Article: Zombies, again? The COVID-19 business support programs in Japan (2023)
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