A zombie bank is an insolvent financial institution that is able to continue operating thanks to explicit or implicit support from the government.

Zombie banks are kept afloat to prevent panic from spreading to healthier banks.

The term zombie bank was first coined by Edward Kane of Boston College in 1987, in reference to the savings and loan crisis (S&L).

Restoring zombie banks back to health can cost hundreds of billions of dollars, weigh on economic growth, and prevent investors from pursuing better opportunities elsewhere.