Zombie Corporations: 10% of Companies Depend on Cheap Fed Money
Ten percent of corporations survive only because central banks have kept real interest rates negative.
The BIS defines Zombie firms as those with a ratio of earnings before interest and taxes to interest expenses below one, with the firm aged 10 years or more.
In simple terms, Zombies are those firms that could not survive without a flow of cheap financing.
The above chart shows the median share of zombie firms across AU, BE, CA, CH, DE, DK, ES, FR, GB, IT, JP, NL, SE and US.
According to the BIS Quarterly Report one out of ten corporations in emerging and advanced countries is a “Zombie”.
Let’s dive into the report for more details.
December 16, 2017 at 04:40PM