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Non-performing Loans in the Greek Banking System: Navigating Through the “Perfect Storm”

In: Non-Performing Loans and Resolving Private Sector Insolvency

Author

Listed:
  • Paul Mylonas

    (Deputy CEO, National Bank of Greece)

  • Nikos S. Magginas

    (Senior Economist, Economic Analysis Department, National Bank of Greece)

Abstract

In view of the severity of the Greek sovereign debt crisis, the analysis presented in the chapter focuses on the macroeconomic drivers of the deterioration in non-performing loans at an economy-wide level, as well as the two larger loan categories of Greek banks’ portfolios, that is, mortgage and corporate loans. The empirical results indicate that the collapse of economic activity and the sharp increase in unemployment, as expected, were the main factors underlying the sharp deterioration in loan quality. However, the empirical evidence is supportive of the existence of other distinct factors that affected non-performing loan generation, related to the extremely procyclical fiscal policy, the protracted liquidity squeeze and the high uncertainty related, inter alia, to Greece’s euro area membership status.

Suggested Citation

  • Paul Mylonas & Nikos S. Magginas, 2017. "Non-performing Loans in the Greek Banking System: Navigating Through the “Perfect Storm”," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Platon Monokroussos & Christos Gortsos (ed.), Non-Performing Loans and Resolving Private Sector Insolvency, chapter 12, pages 275-306, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-319-50313-4_12
    DOI: 10.1007/978-3-319-50313-4_12
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