Phouphet Kyophilavong: Studies of zombie firm are gaining attention among policymakers and academics. A low-productivity firm with weaker economic performance for which the government and banking sector still continue to provide financial support is referred to as a zombie firm.

The authors use a large data set of Chinese firms to investigate the effects of Chinese government investment from 2005–07. It is the first paper to investigate the effects of government investment on firms. The first objective of this paper is to identify zombie firms in the economy. Zombie firms are insolvent firms that continue to operate because of continued access to financing. The authors then examine how government investment affects the performance of zombie and non-zombie firms. To achieve the paper's objective, the authors use a regression model to identify the impact of government investment on non-zombie and zombie firms and conduct a robustness check to avoid endogeneity problems....

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