Jump to ContentJump to Main Navigation
Beyond AusterityReforming the Greek Economy$
Users without a subscription are not able to see the full content.

Costas Meghir, Christopher A. Pissarides, Dimitri Vayanos, and Nikolaos Vettas

Print publication date: 2017

Print ISBN-13: 9780262035835

Published to MIT Press Scholarship Online: May 2018

DOI: 10.7551/mitpress/9780262035835.001.0001

Show Summary Details
Page of

PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 22 May 2022

Financial Development and the Credit Cycle in Greece1

Financial Development and the Credit Cycle in Greece1

(p.251) 7 Financial Development and the Credit Cycle in Greece1
Beyond Austerity

Michael Haliassos

Gikas Hardouvelis

Margarita Tsoutsoura

Dimitri Vayanos

The MIT Press

This chapter reviews the developments in Greece's financial system since the beginning of the crisis. The chapter places them in a broader context by (i) evaluating the long-term performance of Greece's financial system in comparison to other countries, and (ii) reviewing the credit boom-and-bust cycle that Greece has experienced since Euro entry. Risks in the Greek economy remain overly concentrated to those originating them and are not well diversified. By raising the cost of equity capital for firms, this impedes investment. It also drives up corporate leverage, thus making the economy more vulnerable to shocks. These vulnerabilities manifested themselves even before the sovereign crisis hit. Strengthening investor protection, through improvements in the justice system and financial regulation, is an important part of the solution. In the shorter run, the debt overhang problem in the private sector should be addressed. The chapter discusses policy options to achieve these goals.

Keywords:   Financial development, investor protection, diversification, leverage, banks, credit cycle, debt overhang, bankruptcy laws, financial regulation

MIT Press Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.