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Analysis of zombie companies: a serious threat for the stability of the Eurozone?

  • Zombie companies are widely discussed ever since the ‘lost decade’ in Japan. The prolonged recession was experienced for almost two decades and in great deal attributed to the zombie companies. The Eurozone is currently in recession and is experiencing a growing incidence of zombie companies. If this trend is not stopped but encouraged by the negative interest rates, there is a possibility for a prolonged recession or even secular stagnation. This study aims to examine the reasons for the emergence and existence of zombie companies in the past. It discusses the implications zombie companies had on the aggregate macroeconomic indicators. In discusses how zombie companies should be treated and whether they must inevitably be foreclosed. To determine the severity of the problem, it examines the incidence of zombie companies in selected industries in the Euro periphery countries based on their interest coverage ratio (ICR). The results show that there is no significant incidence in the selected markets. It concludes whether currently, the zombie companies are a real threat to the economy of the Eurozone. Furthermore, it suggests ways how the problem of zombie companies should be prevented and treated.

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Author:Ana Antarorova Petrusheva
Referee:Marc Peter RadkeGND
Document Type:Master's Thesis
Year of Completion:2020
Granting Institution:Hochschule Furtwangen
Date of final exam:2020/02/29
Release Date:2020/02/28
Tag:Interest coverage ratio; Negative interest rate; Recession; Zombie
Degree Program:MBA - International Business Management
Functional area:Economics
Licence (German):License LogoUrheberrechtlich geschützt