Essays on Bank Lending, Industrial Policy and Firm Performance Qiuying Qu This dissertation analyzes the effect of politically motivated bank lending and industrial policy on firm performance. It first studies zombies firms and political influence on bank lending in China. Zombie firms-indebted firms that are unprofitable and depend on banks or government bailouts for continued operation-are a drag on the economies in which they operate. The existence of zombie firms has been attributed to

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... continuing to provide forbearance lending for their own interests. But local political officials may also contribute to keeping zombie firms alive, even in settings without the pressures of electoral cycles. Studying loans in China, I examine how bank lending is influenced by local officials and tracks their appointment cycle. I find that there is significant targeting of firms: lending to zombie firms increases in local officials' last service year and exhibits an increasing trend across the appointment cycle, while lending to non-zombie firms shrinks in the last service year and decreases across the cycle. I also find that influence is selective: local officials pressure small local banks more to lend to unprofitable firms, but their ability to affect large nationally operated banks appears to be limited. Second, this dissertation examines the effect of privatization on enterprise performance using evidence from China's state-owned enterprises reform. The ownership structure of China's state-owned enterprises (SOEs) has changed dramatically over the past two decades