Who funds zombie firms: Banks or non-banks?

Saara Tuuli

No 2/2023, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: Analyses of zombie firms have emphasised the role of bank financing as the reason for zombie survival. This conclusion was made despite no comparative analysis of the sources of external finance for zombie firms. This paper provides the first analysis of that sort using Finnish data. Surprisingly, the results show quite clearly that there is no connection between zombie survival and bank financing; this result is robust to various measurement and specification issues. Instead, a role is found for owners (i.e. equity funders) in keeping zombies alive in the (often correct) anticipation of the firm recovering.

Keywords: zombie firms; banks; credit constraints; firm-level data; panel data (search for similar items in EconPapers)
JEL-codes: D25 E51 G2 G3 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-fdg and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:22023

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