Economics
Bank of Japan’s Covid Loan Programs Risk Revival of ‘Zombie’ Firm Concerns
- BOJ funding programs have helped stave off bankruptcies so far
- Analysts warn against keeping the stimulus for too long
Outside the Bank of Japan headquarters in Tokyo, Japan.
Photographer: Kiyoshi Ota/BloombergThis article is for subscribers only.
The Bank of Japan’s loan programs to help businesses ride out the recession run the risk of creating more zombie companies if they are kept in place for too long, analysts warn.
The central bank loan measures, worth almost $1 trillion, have so far fueled a record jump in lending that’s kept firms afloat during the nation’s worst economic slump. The challenge for policy makers is to turn off the tap before an apparently successful lifeline of support for otherwise healthy firms turns into an addictive supply of cash for habitual loss-makers.