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How Unprofitable Companies Stay In Business

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Some firms sustain their businesses by taking on more debt that they likely could never repay. Economists call them zombie companies. When compared to their peers, zombies are smaller in size and deliver lower returns to investors. These companies distort markets, keeping resources from their fundamentally sound competitors. Banks and governments keep zombie firms alive with bailout loans. As the Fed resets the economy with higher interest rates, many zombie firms are filing for bankruptcy.

Chapters:
00:00 — Introduction
01:46 — Zombies
03:35 — Bankruptcies
06:05 — The Lost Decade
07:15 — Debt and bailouts

Produced, shot and edited by: Carlos Walters
Animation: Alex Wood
Supervising Producer: Lindsey Jacobson

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How Unprofitable Companies Stay In Business
Category
Tech
Tags
CNBC, CNBC original, business
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