Non-performing loans in the Greek case: evolution and initiatives in the regulatory framework

Authors

  • Simeon Karafolas Western Macedonia University of Applied Sciences
  • Paraskevi Ktenidou

DOI:

https://doi.org/10.14665/1614-4007-26-1-004

Keywords:

non-performing loans, bank, household, corporations, Greece

Abstract

The paper examines the evolution of non-performing loans in the Greek banking market. The study focuses on the conditions related to the development of non-performing loans, (NPLs), their evolution and the regulation framework.

NPLs have been one of the major consequences of the crisis in Greece, which started after the world financial crisis, and can be mainly attributed to the Greek public debt. The Greek economy suffers from the austerity policies applied after the Memorandum of Understanding was signed between Greece and its lenders in order to reduce the public deficit and in the long term the public debt.

The paper distinguishes some conditions that resulted in the NPLs. One of them is the excessive increase in borrowing which took place before the crisis; it was favored by the banks’ policies but also the stable economic environment since the mid-90s, thanks to the upcoming entry of Greece into the European Monetary Union. During the crisis, the great depression of the economy along with the reductions in income and deposits caused the development of the NPLs in Greece.

NPLs appeared mainly in 2010 and continue to exist up until the year 2019. They concern all the categories of loans, housing, consumer and business loans.

The Greek State with the approval of its lenders tried to introduce some regulatory frameworks regarding the borrowers, households and corporations, and banks with special emphasis to housing loans.

Despite th?se initiatives, NPLs remain a major problem for the banking system and the Greek economy and society.

Downloads

Download data is not yet available.

Author Biographies

Simeon Karafolas, Western Macedonia University of Applied Sciences

Professor

Department of Accounting and Finance

Paraskevi Ktenidou

Lawyer and Accredited Mediator

References

Anoixto parathyro (2018) The program that will replace the “Katseli law” to protect the main

residence, December, 24, https://www.anoixtoparathyro.gr . Accessed 20 December 2018

Bank of Greece, (2011) Annual report for 2010, Bank of Greece,

https://www.bankofgreece.gr/bogekdoseis/ekthdkth2010.pdf . Accessed 23 October 2018

Bank of Greece (2015) Bulletin of Conjunctural Indicators, no 166, January-February 2016.

Bank of Greece (2018) Report on Operational Targets for Non-Performing Exposures, Bank of Greece, March,

https://www.bankofgreece.gr/BogEkdoseis/Report_Operational_Targets_for_NPEs_EN_final.pdf . Accessed 5 December 2018

Bank of Greece (2018a) Credit to domestic private sector by domestic Monetary Financial Institutions (1980 - 2018), (outstanding amounts at end of period in EUR millions), https://www.bankofgreece.gr/Pages/en/Statistics/monetary/financing.aspx. Accessed 12 November 2018

Bank of Greece (2018b) Bank deposits and loans interest rates, Bank of Greece, https://www.bankofgreece.gr/Pages/en/Statistics/rates_markets/deposits.aspx. Accessed 10 December 2018

Bank of Greece (2018c) Bulletin of Conjunctural Indicators, no 182, September-October 2018

Bank of Greece (2018d) Deposits held with credit institutions, on financial institutions,

https://www.bankofgreece.gr/pages/el/statistics/monetary/deposits.aspx. Accessed 5 December 2018

Bank of Greece, (2018e), Evolution of loans & non-performing loans, Bank of Greece, https://www.bankofgreece.gr/Pages/en/Statistics/loans.aspx. Accessed 30 November 2018

European Central Bank, (2018), Supervisory Banking Statistics, Asset quality: non-performing loans and advances by country

https://www.bankingsupervision.europa.eu/banking/statistics/html/index.en.html. Accessed 29 November 2018

European Commission, 2018. Convergence criteria for join euro area. EC. https://ec.europa.eu/info/business-economy-euro/euro-area/enlargement-euro-area/convergence-criteria-joining_en. Accessed 20 September 2018

Hellenic Republic, 2007, Law 3689/2010 Bankruptcy Code, Official Gazette, Issue A’ 153/10-07-2007, http://www.et.gr. Accessed 15 October 2018

Hellenic Republic, 2009, Law 3758/2009 Debtors Information Offices for Overdue Claims and Other Provisions, Official Gazette, Issue A’ 68/05-05-2009, http://www.et.gr. Accessed 15 September 2018

Hellenic Republic, 2010, Law 3689/2010 Settlement of debts of over-indebted individuals and other provisions, Official Gazette, Issue A’ 130/02-08-2010, http://www.et.gr. Accessed 11 October 2018

Hellenic Republic, 2013, Law 4161/2013 Facilitation program for borrowers that fulfill their obligations, amendments to Law 3869/2010 and other provisions, Official Gazette, Issue A’ 143/14-06-2013, http://www.et.gr. Accessed 10 October 2018

Hellenic Republic, 2013a, Law 4424/2013 Government Council for the Management of the Private Debt, Hellenic Investment Fund for the Exploitation of Public Property and Other Urgent Provisions, Official Gazette, Issue A’ 288/31-12-2013, http://www.et.gr. Accessed 9 October 2018

Hellenic Republic, 2014, Law 4307/2014 Incorporation into Greek law the Council Framework Decision 2008/909, as amended by Council Framework Decision 2009/299, on the application of the principle of mutual recognition in criminal judgments, Issue A’ 246/15-11-2014, http://www.et.gr. Accessed 12 December 2018

Hellenic Republic, 2017, Law 4469/2017 Extra-Judicial Mechanism for Dealing with Traders and Businesses, Official Gazette, Issue A’ 62/03-05-2017, http://www.et.gr. Accessed 12 November 2018

Hellenic Statistical Authority, 2018, Evolution of the annual rates of change of the Overall Consumer Price Index http://www.statistics.gr/en/statistics/-/publication/DKT87/-. Accessed 10 December 2018

Karafolas, S., (2018), Effects of economic crisis: a regional examination based on touristic regions in Greece, Vadyba /Journal of Management, Vol. 32, (1), 81-89.

Pantelias, S., 2018, A systemic proposal for the management of non-performing exposures, Overview of the Greek financial system special future, Bank of Greece, November

Piraeus Bank, 2018, Capital Adequacy and Risk Management Regulatory Disclosures on a Consolidated Basis for the Year 2017 (Pillar ΙΙΙ), https://www.piraeusbankgroup.com/el/documentation/pillar-iii-disclosures. Accessed 24 August 2018

Tzortzi, E., 2019, Out-of-court settlement of express NPLs loans for households, “Kathimerini”, 05/01/2019, p. 7.

Tzortzi, E., 2019a, Loan packages 9 billion were sold by systemic banks, “Kathimerini”, 01/01/2019, p. 26.

Published

2019-05-06

How to Cite

Karafolas, S., & Ktenidou, P. (2019). Non-performing loans in the Greek case: evolution and initiatives in the regulatory framework. Journal Transition Studies Review, 26(1), 57-69. https://doi.org/10.14665/1614-4007-26-1-004

Issue

Section

Papers