On-Site inspecting Zombie Lending

• 成果类型: Article
• 署名作者: Bonfim, Diana; Cerqueiro, Geraldo; Degryse, Hans; Ongena, Steven
• 署名单位: Universidade Catolica Portuguesa; KU Leuven; Centre for Economic Policy Research - UK; University of Zurich; Swiss Finance Institute (SFI); Norwegian University of Science & Technology (NTNU)
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4452
• 发表日期: 2023
• 页码: 2547-2567
• 关键词: zombie lending; on-site inspection; banking supervision

摘要

Zombie lending remains a widespread practice by banks around the world. In this paper, we exploit a series of large-scale on-site inspections made on the credit portfolios of several Portuguese banks to investigate how these inspections affect banks' future lending decisions. We find that an inspected bank becomes 20% less likely to refinance zombie firms, immediately spurring their default. Overall, banks seemingly reduce zombie lending because the incentives to hold these loans disappear once they are forced to recognize losses.