Bank competition and formation of zombie firms: Evidence from banking deregulation in China

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance Pub Date : 2025-01-07 DOI:10.1016/j.jbankfin.2025.107390

Xuchao Li , Xiang Shao , Guangjun Shen , Jingxian Zou

引用次数: 0

Abstract

Can bank competition help to attenuate the prevalence of zombie firms? Motivated by a stylized model, this paper studies the effect of bank competition on the formation of zombie firms in two stages: the formation of distressed firms and distressed firms obtaining zombie lending. Using China's 2009 bank entry deregulation as a quasi-natural experiment, the paper finds that bank competition lowers the probability of the formation of distressed firms, while it increases the probability of distressed firms obtaining zombie lending. Overall, bank competition decreases the formation of zombie firms. In addition, the findings show that a higher ex ante proportion of bad loans and higher probability of bad loan recovery lead to a higher probability of distressed firms receiving zombie lending. Both factors encourage banks to sustain lending to distressed firms to keep them alive and to gamble that those firms may recover in the future.

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银行竞争与僵尸企业的形成：来自中国银行业放松管制的证据

银行间的竞争能帮助减少僵尸公司的泛滥吗？本文在一个程式化模型的激励下，研究了银行竞争对僵尸企业形成的影响，分为两个阶段：陷入困境的企业形成和陷入困境的企业获得僵尸贷款。本文以2009年中国放宽银行准入为准自然实验，发现银行竞争降低了陷入困境的企业形成的概率，同时增加了陷入困境的企业获得僵尸贷款的概率。总体而言，银行竞争减少了僵尸企业的形成。此外，研究结果表明，较高的事前不良贷款比例和较高的不良贷款回收概率导致陷入困境的企业接受僵尸贷款的可能性较高。这两个因素都鼓励银行继续向陷入困境的公司提供贷款，以维持它们的生存，并押注这些公司未来可能会复苏。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Banking & Finance Multiple-

CiteScore

6.40

自引率

5.40%

发文量

262

期刊介绍： The Journal of Banking and Finance (JBF) publishes theoretical and empirical research papers spanning all the major research fields in finance and banking. The aim of the Journal of Banking and Finance is to provide an outlet for the increasing flow of scholarly research concerning financial institutions and the money and capital markets within which they function. The Journal''s emphasis is on theoretical developments and their implementation, empirical, applied, and policy-oriented research in banking and other domestic and international financial institutions and markets. The Journal''s purpose is to improve communications between, and within, the academic and other research communities and policymakers and operational decision makers at financial institutions - private and public, national and international, and their regulators. The Journal is one of the largest Finance journals, with approximately 1500 new submissions per year, mainly in the following areas: Asset Management; Asset Pricing; Banking (Efficiency, Regulation, Risk Management, Solvency); Behavioural Finance; Capital Structure; Corporate Finance; Corporate Governance; Derivative Pricing and Hedging; Distribution Forecasting with Financial Applications; Entrepreneurial Finance; Empirical Finance; Financial Economics; Financial Markets (Alternative, Bonds, Currency, Commodity, Derivatives, Equity, Energy, Real Estate); FinTech; Fund Management; General Equilibrium Models; High-Frequency Trading; Intermediation; International Finance; Hedge Funds; Investments; Liquidity; Market Efficiency; Market Microstructure; Mergers and Acquisitions; Networks; Performance Analysis; Political Risk; Portfolio Optimization; Regulation of Financial Markets and Institutions; Risk Management and Analysis; Systemic Risk; Term Structure Models; Venture Capital.