ECB blog notes Greek bank growth hurdles and recovery
ECB economists say Greek banks face growth hurdles despite a strong recovery. High private debt held outside the system limits lending to many households.
Despite a significant recovery from the financial crisis a decade ago, the banking sector in Greece continues to face constraints in its ability to finance broader economic growth. According to economists writing for the European Central Bank blog, a substantial portion of the nation's private debt remains outside the traditional banking system, creating a persistent hurdle for the economy. The sector, which underwent a massive bailout during the crisis years, previously struggled with a 50% non-performing loan ratio and a sharp decline in deposits. However, as macroeconomic conditions stabilized, lenders began to benefit from improved liquidity and higher profits.
