The effective policy framework that helped Greek banks to decrease non-performing loans ratio to single digits.

Petrakis, Nikolaos (2025): The effective policy framework that helped Greek banks to decrease non-performing loans ratio to single digits. Published in: Annals of Social Sciences & Management Studies , Vol. 12, No. 1 (9 September 2025): pp. 1-7.

Abstract

In early 2010, Greece's financial condition was unsustainable, necessitating the implementation of ambitious economic adjustment programs. The fiscal austerity measures launched by the Greek government in agreement with its official creditors ( IMF, ECB and European member states) led to a rather deep recession as GDP dropped by 25% and unemployment peaked at 25%. Households' income, corporations’ profit, as well as their debt-paying ability decreased significantly leading to a huge amount of non-performing loans (NPLs). This paper provides a complete analysis of the measures introduced by the Greek government to stabilize Greek banks and reduce NPLs ratio at single digits.

• Item Type: MPRA Paper
• Language: English
• Keywords: non-performing loans, securitizations, Hellenic Asset Protection Scheme
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

1. Petrakis N, Lemonakis C, Floros C, Zopounidis C (2024) The impact of the ECB’s non-regular operations on bank credit: cross-country evidence. Operational Research an International Journal, 24: 51. 2. Anastasiou D, Louri H, Tsionas M (2016) Determinants of nonperforming loans: Evidence from Euro-area countries. Finance Research Letters, 18: 116–119. 3. Louri H, Migiakis P (2019) Financing economic growth in Greece: Lessons from the crisis. Bank of Greece, working papers series, No.262. 4. Anastasiou D, Louri H, Tsionas M (2019) Nonperforming loans in the euro area: Are core–periphery banking markets fragmented? International Journal of Finance and Economics, 24(1): 97-112. 5. Asimakopoulos I, Avramidis P, Malliaropulos, D, Travlos N (2016) Moral Hazard and strategic Default: Evidence from Greek Corporate Loans. Bank of Greece, working papers series, No. 211. 6. Charalambakis E, Dendramis Y, Tzavalis E (2017). On the Determinants of NPLs: Lessons from Greece. In Bournakis I, Tsoukis C. Christopoulos D, and Palivos T (Eds). Political Economy Perspectives on the Greek Crisis. Palgrave Macmillan: 289-309. 7. Konstantakis K, Michaelides P, Vouldis A (2016). Non-performing loans (NPLs) in a crisis economy: Long-run equilibrium analysis with a real time VEC model for Greece (2001–2015). Physica A, 451: 149–161. 8. Ari A, Chen S, Ratnovski L (2021) The dynamics of non-performing loans during banking crises: A new database with post-COVID-19 implications. Journal of Banking and Finance, 133: 106140. 9. Louzis D, Vouldis A, Metaxas V (2012) Macroeconomic and bank-specific determinants of NPLs in Greece: A comparative study of mortgage, business and consumer loan portfolios. Journal of Banking and Finance, 36: 1012-1027. 10. Karadima M, Louri H.(2020) Non-performing loans in the euro area: Does bank market power matter? International Review of Financial Analysis, 72: 101593. 11. Hardouvelis G, Karalas G, Karanastasis D, Samartzis P (2018) Economic policy uncertainty, political uncertainty and the Greek economic crisis. SSRN Electronic Journal. Available at: Economic Policy Uncertainty, Political Uncertainty and the Greek Economic Crisis by Gikas A. Hardouvelis, Georgios Karalas, Dimitrios Karanastasis, Panagiotis Samartzis :: SSRN 12. Karadima M, Louri H (2021) Economic policy uncertainty and non-performing loans: The moderating role of bank concentration. Finance Research Letters, 38: 101458. 13. Papadamou S, Pitsilkas K (2025) Policy uncertainty and non-performing loans in Greece. American Journal of Economics and Sociology, 84:231–252. 14. Petrakis N, Lemonakis C, Floros C, Zopounidis C (2022) Greek banking sector stock reaction to ECB’s monetary policy interventions. Journal of Risk and Financial Management, 15(10): 448. 15. Petrakis N, Lemonakis C, Floros, C, Zopounidis C (2022) Eurozone stock market reaction to monetary policy interventions and other covariates. Journal of Risk and Financial Management 15(2): 56. 16. Bank of Greece (2022). Financial Stability Review. May 2022. 17. Bank of Greece (2023). Financial Stability Review. May 2023. 18. Bank of Greece (2024). Financial Stability Review. April 2024. 19. Bank of Greece (2025). Financial Stability Review. May 2025. 20. Morningstar DBRS (2024). Greek NPL Market Update: Almost Five Years into HAPS. Available at: https://dbrs.morningstar.com/research/438971/greek-npl-market-update-almost-five-years-into-haps 21. European Commission (2019). State Aid SA.53519. Greece. Hellenic Asset Protection Scheme (“Hercules”). Brussels, 10.10.2019. 22. European Commission (2021). State Aid SA.62242(2021/N) – Greece Prolongation of the Hercules scheme. Brussels, 9.4.2021. 23. European Commission (2023). Commission approves re-introduction of market conform asset protection scheme for banks in Greece. Press release, Brussels, 28.11.2023.