The desertion of rich countries and the mutual support of the poor ones: Preferential lending agreements among the PIGS

By using the BIS data, we analyze the evolution of credit relationships among banks of the Euro-zone during the pre-crisis period (2006Q1–2007Q4), the global financial crisis (2008Q1–2010Q4) and the debt sovereign crisis (2011Q1–2013Q3). In line with other empirical studies, our findings suggest that the onset of the two crises produces a sharp cut in the credit relations between banks belonging to rich Euro-area countries to those belonging to poor ones, the so-called PIGS group. Interestingly enough, however, our results show the emergence of mutual help relations in the credit agreements among the PIGS countries’ banks when these crises arise.