Zombies, again? The COVID-19 business support programs in Japan

We design and conduct 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 investigate the factors behind the allocation of various government programs. We find that firms that had low credit scores in 2019, 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, controlling for the sales growth after the onset of the pandemic. 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 the government. Our result suggests that the government assistance may have subsidized some poorly performing firms that were not yet zombies before the pandemic.