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Are insolvent firms being kept afloat by excessively low interest rates?

Author

Listed:
  • Sanvi Avouyi-Dovi
  • Rémy Lecat

  • Charles W O'Donnell

    (Banque de France - Banque de France - Banque de France, GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Benjamin Bureau
  • Jean-Pierre Villetelle

Abstract

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.

Suggested Citation

  • Sanvi Avouyi-Dovi & Rémy Lecat & Charles W O'Donnell & Benjamin Bureau & Jean-Pierre Villetelle, 2016. "Are insolvent firms being kept afloat by excessively low interest rates?," Post-Print hal-01634193, HAL.
    • Handle: RePEc:hal:journl:hal-01634193
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    Cited by:

    1. Leire San-Jose & Sara Urionabarrenetxea & Jose-Domingo García-Merino, 2022. "Zombie firms and corporate governance: What room for maneuver do companies have to avoid becoming zombies?," Review of Managerial Science, Springer, vol. 16(3), pages 835-862, April.
    2. Müge Adalet McGowan & Dan Andrews & Valentine Millot & Thorsten BeckManaging Editor, 2018. "The walking dead? Zombie firms and productivity performance in OECD countries," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(96), pages 685-736.

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