Japan’s growing debt overhang adds to zombie threat

Business failures in Japan have been stemmed thanks to massive government and bank liquidity support. However, there’s mounting concern regarding debt overhang: A survey of small firms shows that 34% find their debt excessive and that 14% already had excessive debt prior to the pandemic.

What you will learn:

• Some evidence of debt overhang and a rise in zombie firms.
• Relatively healthy small firms will voluntarily close business.
• Debt-overhang and zombies will weigh on bank profitability and productivity.