But an even more direct way that cheap credit could reduce productivity growth is by keeping unproductive companies from going bankrupt. One way that low rates are supposed to juice economic growth is by making it profitable for companies to borrow even when the payoff to borrowing isn’t high. But if rates stay low for years or decades, these companies can just keep on borrowing to stay afloat. They could become so-called zombies — unproductive companies that keep sucking up resources better used elsewhere.
