Credit Misallocation During the European Financial Crisis

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Nevertheless, the adverse effects of credit misallocation on the growth rate of healthier firms were negligible, and so were the effects on TFP dispersion. This goes against previous inuential findings that, we argue, face serious identification problems. Thus, while banks with low capital can be an important source of aggregate inefficiency in the long run, their contribution to the severity of the great recession via capital misallocation was modest. Terms of use: Documents inJEL-Codes: D230, E240, G210.

Surviving beyond expiry: a systematic literature review of zombie firms

“…However, this did not yield a practical model. Schivardi, Sette, and Tabellini (2022) propose zombie identification using two criteria: profitability and default risk. If profitability-calculated as the ratio of 3 years moving average of EBITDA [1] to total assets-is less than the low-risk interest rate, and default risk-calculated as total debt to CAFR 26,1 total assets-is above the median in the existing zombie firms' group, then the firm will be classified as a zombie.…”

“…This has led to severe overcapacity in the mining sector, as evidenced by Dai, Qiao and Song (2019), where the capacity in the mining sector grew by 100% between 2016 and 2017. To maintain supply chain stability, the government funds zombies at the cost of healthy suppliers, further distorting the market (Schivardi et al, 2022). In Han, You, and Nan (2019) and Han et al (2020), evidence was provided that zombies have severe environmental and social impacts.…”

“…One major market implication is the distortion of the value chain caused by zombies. Since zombies also use trade credits for working capital requirements, there is a high probability that this problem will move up the value chain and displace healthy suppliers, disturbing market dynamics (Schivardi et al. , 2022).…”