{"title":"How do political connections affect the formation of zombie firms? Evidence from Chinese manufacturing listed enterprises","authors":"Wei Shao, Ziqi Chen, Huaiyu Liu","doi":"10.1111/apel.12361","DOIUrl":null,"url":null,"abstract":"<p>Zombie firms that rely on government subsidies and bank loans have seriously affected the healthy development of economies. This paper uses data from Chinese listed manufacturing enterprises from 2007 to 2017 to test and analyse the relationship between political connections and zombie enterprises. The study finds: (i) political connections are positively correlated with the ‘zombification’ of enterprises; (ii) credit subsidies play an intermediary role between political connections and ‘zombification’ of enterprises, with the acquisition of large credit subsidies the main path to the ‘zombification’ of politically connected enterprises; and (iii) firms that have political connections may use credit subsidies for inefficient over-investment. This study has value for other countries in clarifying the causes of zombie firms and preventing politically connected enterprises from becoming zombie firms.</p>","PeriodicalId":44776,"journal":{"name":"Asian-Pacific Economic Literature","volume":"36 2","pages":"17-31"},"PeriodicalIF":1.1000,"publicationDate":"2022-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"2","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Asian-Pacific Economic Literature","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/apel.12361","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 2
Abstract
Zombie firms that rely on government subsidies and bank loans have seriously affected the healthy development of economies. This paper uses data from Chinese listed manufacturing enterprises from 2007 to 2017 to test and analyse the relationship between political connections and zombie enterprises. The study finds: (i) political connections are positively correlated with the ‘zombification’ of enterprises; (ii) credit subsidies play an intermediary role between political connections and ‘zombification’ of enterprises, with the acquisition of large credit subsidies the main path to the ‘zombification’ of politically connected enterprises; and (iii) firms that have political connections may use credit subsidies for inefficient over-investment. This study has value for other countries in clarifying the causes of zombie firms and preventing politically connected enterprises from becoming zombie firms.
期刊介绍：
Asian-Pacific Economic Literature (APEL) is an essential resource for anyone interested in economic development in the Asian-Pacific region. With original articles on topical policy issues, literature surveys, and abstracts of articles from over 300 journals, APEL makes it easy for you to keep ahead of the proliferating research on this dynamic and increasingly important region. Read by politicians, journalists, businesspeople, policy-makers, industrialists and academics, APEL avoids technical jargon, and is the only journal devoted to one-stop, in-depth reporting of research on the development of Asian-Pacific economies.
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