Weak EU banks more likely to prop up ‘zombie firms’, ECB paper says

EU needs insolvency reform to reduce proportion of uncompetitive firms, researchers argue

European Union map

Productivity in the European Union is held back by weak banks propping up “zombie firms”, a working paper published by the European Central Bank finds.

In Breaking the shackles: zombie firms, weak banks and depressed restructuring in Europe, Dan Andrews and Filippos Petroulakis look at data from 11 European Union countries from 2001–14.

The authors link information on firms and banks from several large datasets, including the ECB’s survey on the access to finance for enterprises.

They present

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