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Zombie-Lending in the United States -- Prevalence versus Relevance

Extraordinary fiscal and monetary interventions in response to the COVID-19 pandemic have revived concerns about zombie prevalence in advanced economies. Within a sample of publicly listed U.S. companies, we find zombie prevalence and zombie-lending not to be a widespread phenomenon per se. Nevertheless, our results reveal negative spillovers of zombie-lending on productivity, capital-growth, and employment-growth of non-zombies as well as on overall business dynamism. It is predominantly the class of healthy small- and medium-sized companies that is sensitive to zombie-lending activities, with financial constraints further amplifying these effects.