The zombie motif was popularized by the horror movie “Night of the Living Dead” where zombies and vampires morphed into aggressive and deadly undead preying on humans. The zombie concept moved into finance with the advent of Zombie Banks in Japan in the “lost decade” of the 1990s. Those Zombie Banks were kept alive by accommodative central banks ,even though a majority of their assets were often non-performing.
Recently, the Zombie Bank discussion has focused on Chinese financial institutions who are insolvent because they have financed “see through” apartment complexes and also participated in shadow banking activities.
In all these cases it is accommodation from a government or central bank as part of monetary policy that keeps these undead institutions going. However, I never would have expected similar support for undead corporations from supposedly Darwinian capital markets around the world.… Read this article