Zombies and the Process of Creative Destruction

Artikel

The Schumpeterian creative destruction process requires a dynamic reallocation of resources from weak and vulnerable firms to strong firms having high growth potential. Zombie firms that often survive longer than desirable taking advantage of countercyclical policy support, however, tend to thwart that process. Using firm-level data for India this article finds that monetary policy does not hinder the creative destruction process by misallocating credit flows to zombies during periods of economic slowdown, but zombies seem to have dampened the effectiveness of monetary policy at the margin as they use borrowed resources more for their survival than for undertaking new investment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: RBI Bulletin ; ISSN: 004-5512 ; Volume: 76 ; Year: 2022 ; Issue: 2 ; Pages: 53-66 ; Mumbai: Reserve Bank of India

Classification and Topics

• Classification: Wirtschaft ; Money Supply; Credit; Money Multipliers ; Monetary Policy ; Intertemporal Firm Choice: Investment, Capacity, and Financing ; Transportation Economics: Government and Private Investment Analysis; Road Maintenance, Transportation Planning
• Subject: Zombie firms in India ; monetary policy ; bank credit ; investment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Pattanaik, Sitikantha ; Muduli, Silu ; Jose, Jibin
• Event: Veröffentlichung
• (who): Reserve Bank of India
• (where): Mumbai
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/249773
• Last update: 10.03.2025, 11:42 AM CET