Significance
Low interest rates and easy financing conditions in major economies have triggered a search for yield on the part of investors flushed with liquidity and this has allowed so-called 'zombie' companies -- whose operating profits are not sufficient to service their debt -- to obtain financing to stay in business.
Impacts
Estimates of the zombie problem's scale may be understated, if unlisted small and medium-sized firms are worse affected than listed ones.
US studies find that having fewer new firms in an industry cuts business dynamism and worker mobility, as well as sustaining zombie firms.
The more unproductive zombie jobs that Europe’s job retention schemes keep alive, the lower longer-term productivity will be.