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Zombies, Again? The COVID-19 Business Support Programs in Japan

December 30, 2021
Takeo Hoshi*1
Daiji Kawaguchi*2
Kenichi Ueda*3


We designed and conducted a firm-level survey on the use of COVID-19-related government programs, in collaboration with Tokyo Shoko Research, LTD (TSR). Combining the survey results with the financial statements of the respondent firms, we investigated the factors behind the allocation of various government programs. We find that firms that had low credit scores before the COVID-19 pandemic were more likely to apply for and receive the subsidies and concessional loans offered by the Japanese government in 2020. Firms with low credit scores are not necessarily zombies, which are defined to be the firms that are non-viable but kept alive by assistance from creditors and/or government. Our result suggests that the government assistance may have also subsidized some poorly performing firms that were not yet zombies before the pandemic.

We thank Tasuku Sato, Saisawat Samutpradit, and Ryuji Sugioka for their excellent research assistance, Tokyo Shoko Research, LTD (TSR) for the implementation of the web survey, and Masahiro Odaka and Satoshi Takahashi at the Japan Finance Corporation (JFC) for answering our inquiries regarding the concessional loan programs. We also appreciate comments that we received from Midori Ookawa, Kei Takahashi, Tsutomu Miyagawa, Iichiro Uesugi, and from participants at the macroeconomics workshop at Waseda University, the ABFER Capital Market Development webinar, and the 9th joint conference of the Center for Advanced Research in Finance (CARF) at the University of Tokyo and the Research and Statistics Department at the Bank of Japan. All remaining errors are our own. We acknowledge the financial support from CARF, the grant from Japan Science and Technology Agency (JPMJRX18H3) and the Grants-in-Aid for Scientific Research (Kakenhi 20H00071).

  1. *1University of Tokyo
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  2. *2University of Tokyo
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  3. *3University of Tokyo
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