Who funds zombie firms: Banks or non-banks?

Analyses of zombie firms have emphasized the role of bank financing as the reason for zombie survival. This conclusion was made despite no comparative analysis of the sources of external finance for zombie firms. This paper provides the first analysis of that sort using Finnish data. Banks are not found to fund zombie firms by more than other types of funders when shares of the credit market are taken into account. Among different types of funding sources, only the relationship between equity funding and zombie status is found to be statistically significant. While bank funding is found to be associated with a longer zombie lifetime, equity funders are found to prolong zombie lifetime by greater extent than other sources. The choice of zombie definition - of which there are many in the literature - is not uncontentious and plays a role in determining the economic significance of coefficient estimates.