Dual holders, risk shifting, and zombie lending

2014 ◽  
Author(s):  
Fangyuan Ma
Keyword(s):  
Risk Shifting ◽  
Zombie Lending

Bank Cleanups, Capitalization, and Lending: Evidence from India

2020 ◽  
Author(s):  
Yakshup Chopra ◽  
Krishnamurthy Subramanian ◽  
Prasanna L Tantri
Keyword(s):  
Information Asymmetry ◽  
Risk Shifting ◽  
Real Economy ◽  
Economic Stability ◽  
The Real ◽  
Quality Review ◽  
Shadow Banks ◽  
Zombie Lending ◽  
Asset Quality ◽  
The Impact

Abstract We examine the Indian bank asset quality review, which doubled the declared loan delinquency rate. Relative economic stability during the exercise and the absence of a capital backstop together make it unique. We find that the expected reduction in information asymmetry does not automatically lead to the recapitalization of banks by markets. The consequent undercapitalization leads to underinvestment and risk-shifting through zombie lending. The impact flows to the real economy through borrowers, including shadow banks, and adversely impacts growth. These findings show that bank cleanup exercises not accompanied by policies aimed at recapitalization may be insufficient even during normal times.

Risk-Shifting or Risk-Hedging of Portfolio Choices Under Bond Default Risks

2012 ◽  
Author(s):  
Jin-ray Lu ◽  
Chih-Ming Chan ◽  
Yi-Long Hsiao ◽  
Kai-Ping Chen
Keyword(s):  
Risk Shifting ◽  
Risk Hedging ◽  
Portfolio Choices ◽  
Default Risks

Mutual Fund Risk-Shifting and Management Contracts

2016 ◽  
Author(s):  
Jung Hoon Lee ◽  
Charles Trzcinka ◽  
Shyam Venkatesan
Keyword(s):  
Mutual Fund ◽  
Risk Shifting ◽  
Management Contracts

Misallocation of Investment in Europe

2018 ◽  
Author(s):  
Francesca Barbiero ◽  
Philipp-Bastian Brutscher ◽  
Atanas Kolev ◽  
Alexander Popov ◽  
Marcin Wolski
Keyword(s):  
Agency Problems ◽  
Growth Opportunities ◽  
Data Set ◽  
European Firm ◽  
Weak Evidence ◽  
Zombie Lending ◽  
Matched Data ◽  
Global Growth

Using a pan-European, firm-bank matched data set, we find weak evidence of investment misallocation in Europe. Firms with higher debt overhangs invest significantly less, in particular in sectors that are facing good global growth opportunities. We also find that firms with higher debt overhangs are more likely to invest if they borrow from undercapitalized banks, and this effect is particularly strong in industries facing good global growth opportunities, suggesting a misallocation of investment associated with ‘zombie lending’. Our results are consistent with theories of investment misallocation due to agency problems at firms and at banks.

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