Identification And Driving Factors Of Zombie Enterprises In China

During the past few years,dealing with the zombie enterprises has become the core of Chinese structural reform in the supply side.Hence,it is crucial to develop an efficient and applicable standard to identify these special firms.This paper focuses on the lack of long-term development of zombie enterprises and perfects the present standard by adding the total factor productivity(TFP).Using the quarterly data of Chinese A share listed firms from 2003 to 2018,this paper documents that:(1)The CHK standard is more likely to misidentify healthy firms as zombies,while the FNCHK standard is more likely to miss the real zombie enterprises.(2)The result of panel var reveals that firms' TFP is the Granger reason of actual profit and loan subsidy.(3)Using the panel probit model,we find that the human capital,innovation input,equity balance degree and the institution investors play an important role in the formalization of zombie firms.These internal factors exert different influences in firms with various owners,financial constraint and market competition.(4)The expansionary fiscal and monetary policies tend to stimulate the formation of zombie firms,while the tight ones do not exert significant influence on zombie firms.This paper suggests that the government should pay more attention to firms' productivity to deal with these firms more efficiently.