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Establishing the Contributing Factors to the Resurrection of PIIGS Banks Following the Crisis: A Panel Data Analysis

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  • Esteban Miguélez
  • Jonathan Spiteri
  • Simon Grima

Abstract

In this article, we analyse empirically the factors that allowed for the improvement and strengthening of the banking systems in Greece, Ireland, Italy, Portugal and Spain (known as the PIIGS) during the post-financial crisis period 2011-2016. We use panel data on 200 banks and measure their financial soundness using the z-score. Our results show that the improvement is mainly due to managerial factors. To ensure stability, banks must monitor their loans and avoid non-performing loans. The public authorities should try to control banks’ size, encouraging medium-sized banks since these tend to perform better on average while limiting the existence of banks, whose size and importance (despite economies of scale) can destabilize the entire system in case of bankruptcy. Finally, different from previous studies, we include herein the refinancing programmes into the analysis of financial soundness and show that the financial assistance programs have been necessary to ensure the recovery of the banking systems.

Suggested Citation

  • Esteban Miguélez & Jonathan Spiteri & Simon Grima, 2019. "Establishing the Contributing Factors to the Resurrection of PIIGS Banks Following the Crisis: A Panel Data Analysis," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 3-34.
    • Handle: RePEc:ers:ijebaa:v:vii:y:2019:i:1:p:3-34
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    Cited by:

    1. Jéfferson Colombo & Peter Wanke & Jorge Antunes & Abul Kalam Azad, 2022. "Unveiling endogeneity between competition and efficiency in European banks: a robust econometric-neural network approach," SN Business & Economics, Springer, vol. 2(3), pages 1-46, March.
    2. Glen Gauci & Simon Grima, 2020. "The Impact of Regulatory Pressures on Governance on the Performance of Public Banks’ with a European Mediterranean Region Connection," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 360-387.

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    More about this item

    Keywords

    Panel Data; European Banks; PIIGs; Crisis; Banking System.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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