Banking Sector, Non-Performing Loans, Financial Crisis: Evidence from Greece

Author(s)
Dr. Mihail Diakomihalis,
Department of Accounting and Finance, University of Ioannina / Hellenic Open University, Psathaki, 481 00 Preveza, Greece.

ISBN 978-93-5547-681-4 (Print)
ISBN 978-93-5547-682-1 (eBook)
DOI: 10.9734/bpi/mono/978-93-5547-681-4

The financial crisis which erupted in 2008 affected the banking system worldwide, creating spillover effects at the Greek banking sector as well.

Before the eruption of financial crisis, the Greek economy showed indications of recklessness, allowing high public and private debt, deciding over-taxation for physical and legal entities, and increasing trade deficit.

A consequence of the global debt which hit hardest Greece and threatened the stability of the Greek banking System was the increase in non-performing loans and the outflow of bank deposits. The non-performing loans (NPLs) phenomenon has emerged in the early 2010 and has affected negatively the Banking sector and the whole economies.

This period of 2007 to 2009 is characterized by high profitability, liquidity and high capital adequacy.

During the years 2010 to 2012 banks reached their worst ratings.

Profitability before taxes and capital adequacy have been improved In 2017 for the Greek banking system.

The survey concludes the following:

• Interest income on loans is positive for all Banks but fluctuates widely.
• Interest-Expenses have an asymmetric distribution but without much heterogeneity.
• Loans over 90 days past due are uniform except Piraeus Bank which has an extreme price.
• The correlation between ROA and ROE with the loans, is not statistically significant.
• The impact on the Equity of all forms loans, except the regulated, is considered statistically significant.
• The negative impact of loans over 90 days is considered statistically significant on Net Profit before
  Tax.
  
  

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