A rise in so-called "zombie firms," alongside higher interest rates, has led several experts to warn of the impact it could have on employment in developed nations.
Zombie firms, as they are often called, are companies that would have defaulted in a normal economic cycle but continue to function due to an ultra-low interest rate environment.
"Like the characters after which they are named, zombie firms are creatures that really should have shuffled off to the next realm some time ago. Instead of embracing death, they soldier on, usually wreaking havoc on the rest of society," Eoin Murray, head of investment at Hermes Investment Management, said in a research note Wednesday.
Economists define a zombie firm as one which is at least 10 years old but is unable to cover its costs with its profits. Murray described collapsed facilities management and construction services company Carillion as one. Ever since the financial crisis, these firms have taken on huge pile of debts as borrowing became so cheap on the back of low interest rates.
The numbers of such firms are currently on the rise, according to a report from the Bank of International Settlements (BIS) released last month.