Zombie Bank
Definition of 'Zombie Bank'A bank or financial institution with negative net worth. Although zombie banks typically have a net worth below zero, they continue to operate as a result of government backings or bailouts that allow these banks to meet debt obligations and avoid bankruptcy. Zombie banks often have a large amount of nonperforming assets on their balance sheets, which make future earnings very unpredictable. |
|
Investopedia explains 'Zombie Bank'The term "zombie bank" was first coined in 1987 to explain the savings and loan crisis that led to a large number of financial institutions declaring bankruptcy. Quite often, when a bank is deemed a zombie bank, customers will flood the institution in a bank run, only worsening the situation. This was seen during the financial crisis of 2008-2009, in which a large number of national and regional banks became insolvent and forced the U.S. government to issue a bailout package to keep the financial sector afloat. |
|
Related Definitions
Articles Of Interest
-
The Curse Of Zombie Banks
They may not eat brains, but zombie banks definitely hurt the economy. Find out more about this unstoppable horde. -
Bailout Acronyms 101
The subprime meltdown gave rise to a mouthful of financial acronyms. Learn how to sort through this alphabet soup. -
From Booms To Bailouts: The Banking Crisis Of The 1980s
The economic environment of the late 1970s and early 1980s created the perfect storm for a banking crisis. -
Should You Buy Banks' "Toxic" Assets?
The Public-Private Investment Progam is part of the government's effort to fix the failing financial sector. But is it a good investment? -
Who Is To Blame For The Subprime Crisis?
From lenders to buyers to hedge funds, it appears everyone has blood on their hands. -
A Nightmare On Wall Street
These tales of banking terror sent shivers down the spines of even the most steadfast bankers. -
Pay Attention To The Proxy Statement
Don't overlook this overview of a company's well-being. -
Explaining Amortization In The Balance Sheet
Amortization is important to account for intangible assets. Read to find out more about amortization. -
Financial Risks That Don't Pay Off: The Cost Of Reckless Financial Behavior
Despite the recessions, citizens continue to take financial risks and spend outside of their means without fully appreciating the potential consequences for both themselves and the wider economy. -
Investing During Uncertainty
The inability to forecast future events can turn the markets upside down. Find out how to stay right-side up.
Free Annual Reports