In popular fiction, zombies are the walking dead.
You probably already knew that. But you may be surprised to hear that economics has zombies too.
A zombie company is one that makes just enough money to stay afloat, and to pay the interest on its debts. However, it doesnt make enough money to expand or invest, or to reduce the level of its debts.
In other words, its neither alive nor dead its just shambling along, dependent on the ongoing indulgence of its lenders to survive.
This leaves it highly vulnerable to the slightest economic shock.
What makes a zombie company? It has to be reasonably mature. Young firms are often loss-making, but thats because they are at the invest and build stage of development.
The company also has to be chronically loss-making rather than in temporary difficulties in other words, there is no obvious way out of its situation.
A 2018 study from the Bank for International Settlements (which is basically a central bank for central banks) found that the percentage of zombie firms around had risen from just 2% in the late 1980s to 12% by 2016.
The biggest factor driving this rise was the long-term slide in interest rates seen in recent decades.
Lower interest rates enable struggling companies to reduce their interest payments, allowing them to shuffle on for a bit longer. A low interest-rate environment also means investors are more willing to lend to such companies, simply to make any sort of return on their money.
However, this desperate reach for yield simply enables the survival of more zombie companies. Eventually this can be a big problem for the economy as a whole, as it makes the overall economy more fragile.
Some argue that zombies also impair the vital process of creative destruction. If low quality companies plod on rather than going bankrupt, it means that they crowd out younger, potentially more dynamic companies that dont have the same access to resources that they do. As a result, the economy becomes less efficient and productivity falls.
To learn more about the debate around zombie companies and what to do about them, subscribe to MoneyWeek magazine.
Read the rest here:
Too embarrassed to ask what is a zombie company? - MoneyWeek
- It's Time to Put the Right-Wing Zombie Death Cult on Trial - Daily Beast - September 5th, 2021
- The Best Zombie Games Of All Time - GameSpot - September 5th, 2021
- Poll: What's the Best Rob Zombie Song? - Vote Now - Loudwire - September 5th, 2021
- Best Zombie Movies Streaming on Hulu, HBO Max, and Amazon Prime - Yahoo Entertainment - September 5th, 2021
- Fantasy Fest Parade, Street Fair, Even Zombie Bike Ride Canceled At Key Wests Biggest Party Of The Year - CBS Miami - September 5th, 2021
- Korean zombie film 'Train To Busan' rumoured to get American remake; fans are not happy - Times of India - September 5th, 2021
- 'Train to Busan': Fans Are Not Happy About the US Remake 'Train to Busan:' Fans Are Not Happy About the US Remake - Showbiz Cheat Sheet - September 5th, 2021
- The Zombie Attack is returning to Louisville's streets. Here's what to know - Courier Journal - August 24th, 2021
- 8 Surprisingly Realistic Zombie Movies (& 7 That Are Way Over The Top) - News Nation USA - August 24th, 2021
- Fast and Furious: Zombies - The New Indian Express - August 24th, 2021
- Years Before COVID, Zombies Helped Prepare One Hospital System for the Real Pandemic - Scientific American - August 24th, 2021
- Rebellion VFX Releases A New Zombie Army Animated Short - Bleeding Cool News - August 24th, 2021
- Authorities could be getting close to solving Zombie Mike rape cases after unidentified remains found in Niskayuna - NEWS10 ABC - August 24th, 2021
- Call of Duty: Vanguard will have a Zombies mode, made by Treyarch - Polygon - August 24th, 2021
- Fishtown Local: Attack of the zombies | Opinion | gloucestertimes.com - Gloucester Daily Times - August 24th, 2021
- Fear TWD Season 7 Teaser Prepares for the Fallout of the Nuclear Zombie Apocalypse - ComicBook.com - August 24th, 2021
- Call of Duty: Mobiles new zombie mode will extend into next season - Digit - August 24th, 2021
- Mental Health And The Zombie Run With YKHC - KYUK - August 24th, 2021
- Dilapidated 'Zombie House' Demolished On Long Island After Years Of Complaints - Daily Voice - August 24th, 2021
- Netflix Based K-Zombie Horror Title 'Kingdom: The Blood' Unveils First Teaser - GLYFE Nation - August 24th, 2021
- From Rick's boots to zombie weapon design, 'The Art of AMC's The Walking Dead Universe' gives us a deep dive - SYFY WIRE - August 24th, 2021
- Watch: The Walking Dead wakes the zombie horde in opening scene to series' 11th and final season - SYFY WIRE - August 24th, 2021
- The Best Zombie Safe Room Notes In The Back 4 Blood Beta - Kotaku - August 10th, 2021
- Anti-Vaxxer Fears Immunization Will Make Her a Zombie, Like in 'I Am Legend' - Vanity Fair - August 10th, 2021
- The Walking Dead season 11 premiere review: "Zombie fatigue is very real" - Gamesradar - August 10th, 2021
- OPINION | READ TO ME: 'Dino-Zombies' crave candy in picture book - Arkansas Online - August 10th, 2021
- ['Dead Rising' at 15] Why Capcom Needs to Give its Goofy Zombie Series Another Shot - Bloody Disgusting - August 10th, 2021
- Andy Puzder: Biden's 'Zombie Tax' will kill family businesses and haunt the living all across America - Fox Business - August 10th, 2021
- ZOMBIES & SCONES: KEYS WRITER HAS A NEVER-ENDING SOURCE OF IDEAS FOR HER BOOKS - Florida Keys Weekly - August 10th, 2021
- Zombies of The Corn announces new attraction: 'The Fun House' - The Times - August 10th, 2021
- [Fantasia Review] 'Brain Freeze' Thaws Out Zombie Formula with Smart Commentary and Humor - Bloody Disgusting - August 10th, 2021
- Back 4 Blood Zombies Aren't Saying Racial Slurs - But They're Close - COGconnected - August 10th, 2021
- I Played Those Zombie Games Following You Around The Internet So You Don't Have To - Kotaku - July 26th, 2021
- Syfy's Day of the Dead Gives SDCC 2021 a First Look at TV's Newest Zombie Tale - Gizmodo - July 26th, 2021
- The Munsters: Rob Zombie Reveals First Look at Spooky Costumes and Herman Munsters Makeup - Variety - July 26th, 2021
- Kingdom writer, director on creating the zombie thriller series: Hunger was the starting point - The Indian Express - July 26th, 2021
- They find a 'zombie frog' that only comes to the surface when it rains CVBJ - Central Valley Business Journal - July 26th, 2021
- This metal-loving grandma singing Rob Zombie at karaoke is the best thing you'll see today - Louder - July 26th, 2021
- Tim Wiederaenders: Don't be a 'zombie' behind the wheel - Today's News-Herald - July 26th, 2021
- BBQ to the Moon and More Zombie De-SPACs? - TheStreet - July 26th, 2021
- Tearful pal of Brit hiker says boyfriend has been 'like a zombie' since she went missing - The Mirror - July 26th, 2021
- Meet the 'zombie frog,' a new species found in the Amazon - DW (English) - July 11th, 2021
- Can the Cleveland Indians repel another attack of Zombie baseball? - cleveland.com - July 11th, 2021
- Resident Evil: Infinite Darkness review: Netflixs show brings zombies to the White House - The Verge - July 11th, 2021
- Newly-discovered zombie frog in Amazon rainforest could already be at risk of extinction - iNews - July 11th, 2021
- Dont Stop Me Now! Why Queens Greatest Hits is the ultimate zombie album - The Guardian - July 11th, 2021
- With All The Problems In The World Today, I Think It's Time We Asked, Can Zombies Swim? - Quad Cities - July 11th, 2021
- What the Tech? Why you should delete 'zombie apps' you never use - WFMZ Allentown - July 11th, 2021
- Zombie Cells Hold Clues to Improved Healing of Spinal Cord Injuries - SciTechDaily - July 11th, 2021
- Sheri Moon Shares Update on Rob Zombie's The Munsters, Will We See a Trailer Soon? - MovieWeb - July 11th, 2021
- After Years of Ridicule, Kenny Schachter Has Kissed and Made Up With Zombie Formalist Lucien Smith. Here, They Talk Art, Drugs, & the Market -... - July 11th, 2021
- Awesome! Get PAID to be a Zombie at Six Flags in Jackson Township - wobm.com - wobm.com - July 11th, 2021
- Zombies coming to Sanford as producers prepare to shoot film in the flood-damaged community - MLive.com - July 1st, 2021
- "Zombie" homes could be on the rise, how Erie County is looking to prevent that - WKBW-TV - July 1st, 2021
- Night of the Animated Dead to Adapt Zombie Classic (Exclusive) - Hollywood Reporter - July 1st, 2021
- Rare 'zombie fingers' parasitic fungus is hanging on (barely) in Australia - Livescience.com - July 1st, 2021
- What Windows 11 means: We'll be stuck with millions of Windows 10 zombies - ZDNet - July 1st, 2021
- Zombies World Championship Three Wraps Up Zombie Filled Weekend - The Game Haus - July 1st, 2021
- Zombie classic 'Night of the Living Dead' returns with animated adaptation starring Katee Sackhoff, Josh Duhamel - SYFY WIRE - July 1st, 2021
- Milo Manheim Shares Iconic Zed Look, Hints 'Zombies 3' Is Filming Inside the Magic - Inside the Magic - July 1st, 2021
- Zombie Fingers: This Extremely Rare Parasitic Fungus is Hanging on in Few Locations in Australia - Nature World News - July 1st, 2021
- Rob Zombie's The Munsters: 9 Questions We Have About The Upcoming Movie - CinemaBlend - July 1st, 2021
- Zombie Debt: One of the ways you're tricked into paying a bill you shouldn't - WFMYNews2.com - July 1st, 2021
- Zombies World Championship Three Brings Competitive Zombies Back to the Stage - The Game Haus - July 1st, 2021
- The best Call of Duty Zombies maps of all time - Gamepur - July 1st, 2021
- Zombies Ate My Neighbors and Ghoul Patrol Release Time - DualShockers - July 1st, 2021
- Zombie Squad - Index page - June 14th, 2021
- The Zombie Hunters - June 14th, 2021
- Top Call of Duty Zombie Games of All Time - The Game Haus - June 14th, 2021
- This week in space: Zombie stars and the corporatization of the galaxy - Chron - June 14th, 2021
- Framestore's VFX is the 'Zombie Cat's Meow' in 'Army of the Dead' - Animation World Network - June 14th, 2021
- Zack Snyder talks Army of the Dead's robot zombies and aliens - Gamesradar - June 14th, 2021
- STREAMING: ZOMBIES, MURDER AND DEVILS - DAWN.com - June 14th, 2021
- Fear the Walking Dead season 7 release date: Latest news about the zombie spin-off - Radio Times - June 14th, 2021
- The kids are back in town - Telegraph India - June 14th, 2021
- Survivors vs zombie soldiers in first pics from The Walking Dead season 11 - Winter is Coming - June 14th, 2021
- The Miz Slams Online Haters Of Out Of The Box Zombies Match - Ringside News - June 14th, 2021
- Why Did the CDC Develop a Plan for a Zombie Apocalypse ... - June 1st, 2021
- The Best Locations in Dallas To Hide In A Zombie Apocalypse - Dallas Observer - June 1st, 2021
- The Could You Survive This Zombie Apocalypse? Matrix - The Ringer - June 1st, 2021
Reviewed and Recommended by Erik Baquero