Analysis Of The Case Of Enterprise Zombie From The Perspective Of Credit Soft Constraint

As a former giant company of photovoltaic industry,LDK received a large amount of preferential policies from local government.Around 2012,significant financial crisis broke out in LDK.Instead of requiring the corporate stop producing,local governemnt misunderstood the shrinking photovoltaic market trend and inefficient internal management to offer loan resources to save LDK.Unfortunately,LDK failed to recover from the heavy loan loss.The financial investment environment was extremely deteriorated and local economic development almost stopped.This paper selects zombie enterprises and soft credit constraints as the theoretical basis.After a brief introduction of LDK,the financial analysis and horizontal comparison will be conducted.Then,based on the revised CHK model of "zombie enterprise",the financial character of LDK will be clearly depicted.The analysis of LDK's zombification from the perspective of soft credit constraints is the major work.In the end,this paper draws the following conclusions: 1.local government,creditor banks and enterprises are all responsible for the soften of credit constraints,and the outbreak of moral hazard in LDK is the final cause of zombification.2.This paper suggests that enterprises should properly invest to avoid blind expansion and do a good job in financial risk management;credit banks should conduct credit management independently and provide credit resources for enterprises following market rules;the government should improve the "zombie enterprises" exit system as soon as possible and create a "re-employment" platform for employees.