Throwing good money after bad: Zombie lending and the supply chain contagion of firm exit

Autor:	Yun Dai, Jiankun Lu, Dinghua Liu, Xuchao Li
Rok vydání:	2021
Předmět:	Upstream (petroleum industry) Organizational Behavior and Human Resource Management Economics and Econometrics Creative destruction business.industry Supply chain Zombie Business failure Monetary economics Trade credit Economics business Downstream (petroleum industry) Bailout
Zdroj:	Journal of Economic Behavior & Organization. 189:379-402
ISSN:	0167-2681
Popis:	This paper studies whether the bailout of downstream firms helps stop the supply chain propagation of business failure. By analyzing persistent zombie lending in China, we show that such a bailout policy does not work. Zombie lending to downstream firms does not reduce the exit likelihood of upstream firms. Worse, it distorts efficiency-based firm exit in upstream industries. The exit distortion effect works through the trade credit chain and is more profound in industries with stricter financial constraints and tighter supply chain connections. Our findings reveal the importance of credit allocation efficiency for the Schumpeterian process of creative destruction that is essential for economic growth.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::011ea16a968245f77023ad0756cf1827 https://doi.org/10.1016/j.jebo.2021.06.042 Zobrazit plný text záznamu Full Text from ScienceDirect