An Evaluation of the Greek Banking System over the Period 2009-2019

Abstract

With the proliferation of banking distress issues over the last years, empirical literature on systemic banking crises has grown substantially. Yet, studies assessing the antecedents of banking systems’ structure within EU peripheral economies are less developed. Here, we use data from 2009 to 2019 and employ annual financial statements of Greece’s four systemic banks, to assess the country’s banking system. Our analysis is based on two panel data econometric models using ten bank-specific business process performance indicators and four macroeconomic variables. Our findings indicate that the causes of the Greek banking system’s collapse can be divided into three categories. The first two include macroeconomic and bank-specific factors, whereas the third category suggests other factors related to the long-lasting financial crisis. Evidence recorded highlights that the main cause of the Greek banking crisis was the accumulated deficits and imbalances of the economy which caused initially a debt crisis followed by a banking crisis. However, the exact causes of the problem seem to be more intricate and have their roots in perennial structural distortions of the Greek economy.