IDEAS home Printed from
   My bibliography  Save this article

Big Banks In Small Countries:The Case of Cyprus


  • Constantinos Stephanou

    () (Senior Financial Economist at the World Bank and currently on secondment at the Financial Stability Board)


A large banking system has served Cyprus well to date. It has supported the country’s outward-oriented, services-driven economic model and has significantly contributed to output and employment. The question going forward is whether banking system growth can continue indefinitely and at what cost. This paper argues that systemic risks are important for Cyprus given its banking system size and structure - in particular, the presence of big domestically-owned banks. It recommends that the authorities take a more macroprudential approach to financial sector oversight, that they engage in an immediate and significant fiscal consolidation effort, and that they introduce a set of prudential measures for systemically important banks that are customized to the needs of Cyprus.

Suggested Citation

  • Constantinos Stephanou, 2011. "Big Banks In Small Countries:The Case of Cyprus," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 5(1), pages 3-21, June.
  • Handle: RePEc:erc:cypepr:v:5:y:2011:i:1:p:3-21

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Bank for International Settlements, 2010. "Macroprudential instruments and frameworks: a stocktaking of issues and experiences," CGFS Papers, Bank for International Settlements, number 38.
    2. International Monetary Fund, 2010. "United Kingdom; Selected Issues Paper," IMF Staff Country Reports 10/337, International Monetary Fund.
    3. International Monetary Fund, 2009. "Cyprus; Financial Sector Assessment Program: Financial System Stability Assessment," IMF Staff Country Reports 09/308, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Constantinos Stephanou, 2011. "The Banking System in Cyprus:Time to Rethink the Business Model?," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 5(2), pages 123-130, December.
    2. Sofronis Clerides, 2014. "The Collapse of the Cypriot Banking System: A Bird’s Eye View," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 8(2), pages 3-35, December.
    3. Dermot Hodson, 2014. "Eurozone Governance: Recovery, Reticence and Reform," Journal of Common Market Studies, Wiley Blackwell, vol. 52, pages 186-201, November.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:erc:cypepr:v:5:y:2011:i:1:p:3-21. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Angela Shekersavva). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.