Fewest Bankruptcies Since 1966 Raise Fears of Japan Zombie Firms

Japan last year had the fewest bankruptcies in a half century.

That’s how well the government’s response to the pandemic has worked in keeping businesses afloat and people employed.

But economists warn there may be a darker side. Zero-interest loans and subsidies may have also helped prop up firms that were already non-performing before the crisis and probably should have been left to go under.

While policy makers everywhere have trouble providing just the right amount of aid during a crisis, Japan has a long history of easy credit that’s been blamed for keeping “zombie” firms alive. It’s worsened ...