In this paper, we analyse the incidence of zombie firms in Italy in 2019, together with their take-up of the economic support measures put in place during the pandemic. To this end, we assess to what extent the main proxies used in the literature identify as zombie firms those that are worse performing and riskier.
We find that in 2019, zombie firms represented 3 to 5 per cent of all corporations. They were concentrated in the industries hit the most by the pandemic-related drop in revenues in 2020. Moreover, they were more likely to experience liquidity deficits and spikes in their default probability. However, they were less likely than healthy firms to take up economic support measures.
