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The Covid horror picture show: why we have little to fear from ‘zombie firms’

Voss, Dustin, Van Overbeke, Toon ORCID: 0000-0002-0620-9943 and Hancké, Bob (2020) The Covid horror picture show: why we have little to fear from ‘zombie firms’. LSE European Politics and Policy (EUROPP) blog (10 Dec 2020). Blog Entry.

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Abstract

Recently, economists have voiced fears that the costly Covid-19 business support programmes rolled out by European governments could create ‘zombie firms’ – failing companies kept artificially alive by the continued extension of credit. Examining emergency credit provision in Germany, Dustin Voss, Toon Van Overbeke and Bob Hancké argue that such concerns are largely unwarranted. Financial scrutiny is provided through deeply institutionalised relationships between banks and firms in the Mittelstand that help overcome information asymmetries regarding solvency. To protect political and social peace in the midst of a pandemic, the zombification of some firms is thus a risk well worth taking.

Item Type: Online resource (Blog Entry)
Official URL: https://blogs.lse.ac.uk/europpblog/
Additional Information: © 2020 The Authors
Divisions: LSE
European Institute
Government
Subjects: J Political Science > JZ International relations
J Political Science > JN Political institutions (Europe)
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
Date Deposited: 26 Jan 2021 11:30
Last Modified: 01 Aug 2021 23:03
URI: http://eprints.lse.ac.uk/id/eprint/108308

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