 Resolving Bad Loans and Zombie Firms: The Case of GreeceGeorgios Gatopoulos, Alexandros Louka, Konstantinos Peppas and Nikolaos Vettas No 19868, CEPR Discussion Papers from Centre for Economic Policy Research Abstract: We analyze the negative externalities of “zombie†firms on investment, employment, and productivity in the context of the Greek crisis, during which the share of zombie firms and non-performing business loans peaked at 20% and 50% respectively. Using a panel dataset by firm size and sector during 2002-2021, we find a strong correlation between non-performing business loans and zombie firms. Empirical analysis reveals that zombie firms impact on the economy in several ways: (1) healthy firms outperform zombies in investment, employment, and productivity; (2) high zombie firm density hinders investment growth among healthy firms; (3) healthy firms must increase productivity to survive in zombie-dense sectors; and (4) zombie firms’ capital concentration limits resource reallocation to more productive uses. Younger and larger firms generally perform better across key metrics, also during crisis conditions. Resolving zombie firms and non-performing loans can enhance resource allocation, both within and across sectors of economic activity, boosting growth in the medium to long term. JEL-codes: G20 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:19868 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.