Economics Talk: Unearthing Zombies | Shiv Nadar University
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Economics Talk: Unearthing Zombies

Event Date: 
Friday, April 16, 2021 -

The Department of Economics invites you to a talk titled ‘Unearthing Zombies’ by Dr. Nirupama Kulkarni, Research Director, CAFRAL on April 16, 2021.

Abstract of the Talk
Since ineffective debt resolution perpetuates zombie lending, bankruptcy reform has emerged as a solution. We show, however, that lender-based frictions can limit reform impact. Exploiting a unique empirical setting and novel supervisory data from India, we document that a new bankruptcy law had muted effects on lenders recognizing zombie borrowers as non-performing. A subsequent unexpected regulation, targeting perverse lender incentives to continue concealing zombies, increased zombie recognition particularly for undercapitalized and government-owned banks, highlighting the role of bank capital and political frictions in sustaining zombie lending. Resolving zombie loans allowed lenders to reallocate credit to healthier borrowers who increased investment.

Friday 16, Apr 2021
03:00 PM - 04:30 PM