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Specialty Conference

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Specialty Conference

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Jan 2017

Credit Misallocation During the European Financial Crisis

Fabiano SCHIVARDI, Enrico SETTE, Guido TABELLINI
Using data on bank-firm relationships in Italy during the Eurozone financial crisis, we show that: (i) compared to healthy banks, under-capitalised banks cut credit to healthy but not to zombie firms and are more likely to prolong a credit relationship with a zombie; (ii) in area sectors with more l...
Keywords: bank capitalization, Zombie Lending, capital misallocation
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