Monetary policy, financial development and the financing of zombie firms: evidence from China.

This paper examines the financing channels for zombie firms in China. We find that equity markets and suppliers provide substantial financing support for zombie firms, while banks and other financing channels are less important. We also find that the amount of investment does not increase accordingly after zombie firms obtain external financing, which indicates an inefficient use of funds by these zombie firms. Our results are robust to various definitions of zombie firms, and also to a propensity score matching method. [ABSTRACT FROM AUTHOR]