Credit Provision Strategy During Financial Crisis Using Bank Accounting Data

Accounting and Finance Research, Vol. 5, No. 4; 2016 URL: doi/10.5430/afr.v5n4p137

10 Pages Posted: 18 Nov 2016

See all articles by Eleftherios Aggelopoulos

Eleftherios Aggelopoulos

University of Patras, Department of Business Administration

Vasileios Giannopoulos

University of Patras - Business Administration

Evgenia Mpourou

University of Patras - Department of Economics

Date Written: November 12, 2016

Abstract

This paper examines the changes in credit provision for the Greek Banking Sector before and during the financial crisis. Also, it investigates the impact of specific loan characteristics in shaping the overall interest rate of new and existing business loans. A data set with monthly accounting data of Greek Banks for the period January 2003 to June 2011 is utilized, thus incorporating the crisis effects. The study findings reveal the beginning of the credit crunch at the third quarter of 2009. As far as new loans are concerned, it was found that large loans are priced less than the small ones. Moreover, the results show the greater and positive contribution of small loans to the derivation of the total lending interest rate. Furthermore, it is found that the bargaining power of large borrowers during the crisis causes a negative impact of large loans on the total interest rate. Finally, it is shown that in the existing loan portfolio, the crisis significantly reduces the effect of short-term loans, while simultaneously intensifies the positive effect of medium and long-term loans. The findings have important managerial implications for bank managers and policymakers.

Keywords: credit provision, banks, crisis

JEL Classification: G21, M41, C23

Suggested Citation

Aggelopoulos, Eleftherios and Giannopoulos, Vasileios and Mpourou, Evgenia, Credit Provision Strategy During Financial Crisis Using Bank Accounting Data (November 12, 2016). Accounting and Finance Research, Vol. 5, No. 4; 2016 URL: doi/10.5430/afr.v5n4p137, Available at SSRN: https://ssrn.com/abstract=2868428

Eleftherios Aggelopoulos (Contact Author)

University of Patras, Department of Business Administration ( email )

University Campus
Patras, 26504
Greece

Vasileios Giannopoulos

University of Patras - Business Administration ( email )

Patras
Greece

Evgenia Mpourou

University of Patras - Department of Economics ( email )

Patras GR-265 04
Greece

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