What Causes Non-Performing Loans? The Case of Greece Using Primary Accounting Data

Giannopoulos, Vasilios

doi:10.4236/ojacct.2018.74013

Cited by 2 publications

(2 citation statements)

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“…The empirical literature features important papers by Castro (2013), Louzis et al (2012), Baltagi (2001) and Quagliariello (2007), as well as papers centering on specific countries or country groups (e.g., Rinaldi & Sanchis-Arellano (2006) on the Eurozone and Glen & Mondragón-Vélez ( 2011) with a 22-country sample and Çifter (2014) for 10 Central and East European countries). Sfakianakis et al (2020) is a recent contribution to the empirical literature with an extensive panel of 41 countries also featuring the inclusion of variables (such as housing prices) which allow for interesting interpretations about the decision-making process of borrowers, while Giannopoulos (2018) is also referring to Greece.…”

Section: Selective Literature Reviewmentioning

confidence: 99%

Determinants of NPLS Revisited: The Aftermath of Two Crises and the Case of Greece

Sfakianakis¹,

Agiomirgianakis²,

Ioakimidis³

et al. 2022

TEL

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Building on previous research contributions on the macroeconomic determinants of NPLs, this paper aims at assessing the cumulative impact of the two recent crises which, although based on different fundamentals, both resulted in a turbulent macroeconomic environment: first, the global financial crisis originating from the US financial system in 2007 (which soon became an economic crisis culminating in a debt crisis for some countries) and then the most recent outbreak of the COVID-19 pandemic-a health crisis, albeit with very significant economic repercussions (some of which are not yet apparent, while the impact of others cannot yet be fully extrapolated). In this research endeavor we use an extended set of OECD countries for a time span of 16 years including the most recent data available (2020). Apart from evaluating the explanatory power of new variables and variables only recently introduced (and used so far only to a limited extent, such as housing prices), this model provides useful insights also on the possible directions of economic policy interventions to alleviate the impact of the most recent crisis, which is still unfolding. Using our preferred specification, we then proceed to study the case of Greece, which was the country probably hardest hit by the financial crisis, with NPLs approaching 50% of total loans. While still recovering from the previous crisis, Greece has to deal with the repercussions of the pandemic; as a result, interesting conclusions can be drawn from this specific case study.*Financial support from the Subproject 2: Research support actions through the financial support of the laboratories of the Hellenic Mediterranean University (HMU) and the institutes of HMU of the project "Strengthening and optimization of the operation of the services of the HMU", is gratefully acknowledged.

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Section: Selective Literature Reviewmentioning

confidence: 99%

Determinants of NPLS Revisited: The Aftermath of Two Crises and the Case of Greece

Sfakianakis¹,

Agiomirgianakis²,

Ioakimidis³

et al. 2022

TEL

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“…4-To give credit to a listed business enterprise does not decrease the risk of having a strategic defaulter. Giannopoulos (2018) aimed to determine the effect of some variables on NPLs during the global crisis period by using a binomial logistic regression. He used the data of 2.591micro/small enterprise loans given by one of the four systemic banks in 2005.…”

Section: Literature Reviewmentioning

confidence: 99%

The Effect of Changes in Economic Growth on Non-Performing Loans (NPLs) Problem in the Greek Banking System

Şan¹,

Haderi²

2021

RJFA

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The Greek economy was affected very badly by the global economic and financial crisis of 2007-2008. The main reason of this catastrophic event is that the country's speedy economic and financial growth in the pre-crisis period heavily based on the foreign funds, and the flow of these funds stopped immediately -even turned to opposite direction-with the spread of the crisis to Europe. This negative happening as well as the rearrangement of the public debts and remarkable reduction in the bank deposits led to a big financial crisis, and thus economic recession. Meanwhile, the loan quality in the banking system worsened extremely -almost half of the credits turned to bad loan-due to the macroeconomic deterioration as well as the banks' very tolerated lending policies before the crisis, the borrowers' imperfect attitudes, and improper governance. The improvement in NPLs ratio, which started simultaneously with the modest economic recovery in 2017, decreased it to 30.2 percent in 2020 from its peak level of 48.5 percent in 2016. However, a big part of it has been achieved thanks to write-offs and loan-sales.In this study, it was aimed to measure the effect of the changes in economic growth on these drastic changes in NPLs ratio. Although the changes in the gross domestic product (GDP) and NPLs ratio have always been in consistency with the economic theory, except the pandemic year of 2020, the often big differences between their changing rates imply that some other factors have also played significant role on NPLs movements. The findings of some studies for Greece indicate to remarkable impact of both economic growth and the other factors on bad loans issue. The results of our regression analysis also show that the relation between economic growth and NPLs is not so strong.In spite of the noticeable improvement, NPLs ratio is still at a very high level and requires constant remarkable declines in order to come down to the generally accepted levels. To perform this and have economic and financial recovery at the same time, the recovery should not be achieved only by write-offs and portfolio sales, but by collections from borrowers, and executions. The banks and the government should make the necessary changes in their policies and applications so as to decrease NPLs ratio through new lending, compromise with proper borrowers, and court executions.

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What Causes Non-Performing Loans? The Case of Greece Using Primary Accounting Data

Cited by 2 publications

References 38 publications

Determinants of NPLS Revisited: The Aftermath of Two Crises and the Case of Greece

Determinants of NPLS Revisited: The Aftermath of Two Crises and the Case of Greece

The Effect of Changes in Economic Growth on Non-Performing Loans (NPLs) Problem in the Greek Banking System

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