Can the Belt and Road Initiative Promote the Dezombification of Firms?

Based on China's supply-side structural economic reforms, this paper examines the impact of the Belt and Road Initiative (BRI) on the formation of zombie firms. We find that the BRI significantly inhibits the formation of zombie firms by easing financial constraints and optimizing investment efficiency. Our findings are robust to different model specifications and samples. Further investigations find that the impact of the BRI is pronounced for private enterprises, manufacturing enterprises and enterprises with more intense market competition. Overall, our results provide clear policy implications by shedding light on the role of the BRI in optimizing the allocation of resources.