Zombie enterprises, crowding out effect, and total factor productivity: Empirical evidence from Chinese manufacturing listed companies

Due to special historical factors and government preferences, many zombie enterprises with subsidies and credit as the main source of income can be maintained in China. Zombie enterprises damage the fair position of market players and cause irreparable damage to the market mechanism, with efficiency as the core. This study chooses factor productivity as the starting point and uses the financial data of listed manufacturing companies from 2008 to 2016 as the sample to explore and evaluate the damage of zombie enterprises to the production efficiency of the Chinese market. The main contributions of this study are as follows. First, zombie enterprises in listed companies are identified by a comprehensive identification method. Second, the growth rate of the total factor productivity of non-zombie enterprises is measured by the DEA Malmquist index method, the crowding-out effect of zombie enterprises on TFP growth of normal enterprises is studied, and the specific transmission path is analysed. The empirical results show that zombie enterprises have a significant inhibitory effect on the total factor productivity growth of non-zombie enterprises, verifying our conjecture at the macro level. Finally, on the basis of theoretical and empirical analyses, this paper puts forward some policy suggestions to help zombie enterprises clear up to promote the growth of total factor productivity of non-zombie enterprises and the healthy development of the entire industry.