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Who funds zombie firms: Banks or non-banks?

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  • Tuuli, Saara

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.

Suggested Citation

  • Tuuli, Saara, 2023. "Who funds zombie firms: Banks or non-banks?," Bank of Finland Research Discussion Papers 2/2023, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:22023
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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