Greek Debt Research Articles

The Olympics Legacy, debt crisis and exceptional strategic planning: the case of Athens

ABSTRACT There have been two events in the planning at Athens over the last twenty years: the Olympic and Paralympic Games and the Greek debt crisis (2008–2018). We analyse here whether any form of planning other than classic strategic planning was used for these events. The Olympics are a mega event and are often seen as the Holy Grail, an ideal way to boost a city's appeal. A debt crisis implies a policy of austerity. The article’s objective is to explore whether an exceptional strategic planning was implemented for these two exceptional events, side-by-side to the classic strategic planning. This planning method and the way it was rolled out bear the marks of intense private sector involvement, a top-down decision-making process, together with urgency, derogations from the usual project rules, and a focus on a return on investment and limited risk-taking. Planning like this can lead to a contradiction with the spatial priorities of traditional planning, or to a legacy turned more towards the qualitative improvement of the city, by a concern for developing its international attractiveness, rather than to giving priority to adaptation to local needs.

Equally poorer: inequality and the Greek debt crisis

Equally poorer: inequality and the Greek debt crisis

ЯНИС СРЕЩУ МИНОТАВЪРА: ЛЕГЕНДАТА ПРОДЪЛЖАВА (РАЗМИСЛИ ПО ПОВОД НОВАТА КНИГА НА ЯНИС ВАРУФАКИС)

A new book by Yanis Varoufakis, Technofeudalism - What Killed Capitalism, has recently been published. Do you remember Varoufakis? In early 2015, at the height of the Greek debt crisis, the little-known (at the time) university lecturer was appointed finance minister and quickly became a star. He was certainly not the first to oppose the so-called Washington Consensus and neoliberalism in economics, but he was perhaps the most eloquent and the most extreme in his criticism, backed by a deep knowledge of the workings of the modern market economy. His time in power was less than half a year, but he will certainly be remembered for a long time. After him, Greece now has its sixth finance minister, but I am sure that even there few people know their names. I allowed myself this extravagant title as I am still under the strong impression of one of his previous books, The Global Minotaur, in which Varoufakis examines economic history and crises, focusing on the role of the US in the post-World War II global economy. The author uses the myth of the Minotaur as a metaphor to explain the complex system of global financial flows that fuelled the US economy and contributed to the accumulation of global economic imbalances that ultimately led to the global financial crisis of 2007-2009.

The Impact of Greek Debt Crisis on EU Integration and Its Enlightenment

As a very important member of the European Union, Greece has a very significant influence on the development of the European Union. The outbreak of the Greek debt crisis has a far-reaching impact on the process of EU integration. At the same time, the fiscal deficit and other economic and financial problems exposed by the Greek debt crisis have enlightenment for China and other countries. Therefore, it is of great research value to study the problems exposed in the Greek debt crisis and its impact on EU integration, and learn from these problems. This paper will first introduce the development process of the Greek debt crisis, then analyze its impact on EU integration, the way out of the Greek debt crisis, and finally discuss its reference significance to China and other places.

Spillover effects and transmission of shocks in Visegrad equity markets

PurposePaper aims to investigate the interdependencies and spillover effects that the Visegrad (V4 hereafter) Equity Markets hold on each other. The V4 group stands for the political alliance of four Central European countries: Poland, the Czech Republic, Hungary and Slovakia.Design/methodology/approachThe study uses Wavelet coherence, dynamic conditional correlation GARCH (1, 1) and unrestricted vector autoregression (VAR) methodologies. Daily data series (covering the period from January 2, 2006, to February 2, 2023) are analyzed to assess coherence, time-varying conditional correlation and shock transmission among the V4 Equity Markets.FindingsWavelet analysis reveals that the Slovak equity market does not maintain coherence with three other equity markets. The time-varying conditional correlation documents for the high interdependence during the COVID-19 outbreak of the four indexes. The VAR estimates reveal that shocks in the Warsaw equity market are easily transmitted in Prague and Budapest exchanges but not in Bratislava. The results show that the Slovak equity market tends to be isolated from the influence of other three V4 exchanges. This isolation is attributed to its size, limited volume and adoption of the euro in 2009. The study emphasizes the Slovak financial system’s gravitation toward the Eurozone after euro adoption.Originality/valueNotably, the findings provide important signals for local and international investors as the results cover four significant international shocks. The global meltdown of 2008/09, the Greek debt crisis of 2010/11, the COVID-19 pandemic and the Russia-Ukraine war.

Not All Shocks Are Created Equal: Assessing Heterogeneity in the Bank Lending Channel

We provide evidence that the yield impact of unconventional monetary policy is not a sufficient statistic to measure the strength of the bank lending channel of unconventional monetary policy. As a laboratory, we study three major positive events in the European sovereign debt crisis—the Greek debt restructuring (private sector involvement (PSI)), outright monetary transactions (OMT), and quantitative easing (QE)—using credit registry and security-level bank balance sheet data from Portugal, a country that was directly exposed to all three events. Even though the price of sovereign debt increased by substantially more after the PSI and OMT announcements, only QE led banks to reduce their net sovereign debt holdings and had statistically and economically significant effects on lending to firms and households. The differential effect on banks’ behavior reflects two forces. First, lower bank capitalization levels during the PSI and OMT episodes as well as disincentives to sell sovereign bonds because of their collateral value in the European Central Bank’s long-term refinancing operation facilities reduce the effectiveness of the recapitalization channel. Second, only QE involved direct asset purchases by the central bank and thereby induced a portfolio rebalancing channel from sovereign debt to loans. This paper was accepted by Victoria Ivashina, finance. Funding: The contribution by G. Nogueira to this paper has been prepared under the Lamfalussy Fellowship Program sponsored by the European Central Bank. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.00104 .

The Performative Politics of Greek Debt

After demonstrating that the sphere of finance more broadly and politics of debt more particularly build on performance and theatricality, I shed light on the illusions that are, I argue, constitutive of Greek debt. I make the case that Greek debt is about a perpetually failing pay-back inseparable from Greece’s western creditors’ postcolonial interests and the orientalizing logics of finance capitalism. I examine how this “performative misfire” of Greek debt is legitimized by the staging of Greece’s structural dependence upon the west as “independence” – a spectacle often maintained by narratives that frame Greece as the “birthplace” of western civilization and as a direct and continuous extension of Greek antiquity. I map connections between these notions of “performative failure” and finance capital’s elusive promise to autonomize itself from industry and production. Finally, I introduce the concept of performance economy in order to conceptualize economies that build on acts disruptive of these illusions.

Explaining the first effects of Covid-19 on Greek banks’ profitability

Abstract The present paper studies the profitability dynamics of systemic Greek banks. By deploying an econometric methodology based on multiple linear regression analysis, we empirically investigate the drivers of banks’ return on assets between 2008 and 2020. We also shed light on the first effects of Covid-19 on banks. Examining the effects various macroeconomic, regulatory and financial factors, we find that public debt developments, including Greek debt restructuring, and banks’ provisions for credit losses had a negative effect on banks profitability. Besides, we testify that banks' capital adequacy and the size of liabilities of financial institutions towards their customers strengthened chances of increased bank profitability. We discuss the implications of our empirical findings in light of macroeconomic, regulatory and financial developments in Greece and the EU. JEL classification number: G01, G20, G21, M40, M49. Keywords: Systemic Banks, Profitability, Greece, ROA, Debt Crisis, Covid-19, Financial Analysis, Financial Ratios.

Decomposing wealth inequalities in the wake of the Greek debt crisis

While Greece has been the epicentre of economic research on many dimensions after its deep and prolonged crisis, wealth inequalities remain understudied. Our paper explores the levels, distribution, composition, and dynamics of household wealth in the aftermath of the Global Financial Crisis. We find large asymmetries in the allocation of wealth in Greece: the richest 1% of the population holds roughly as much wealth as the poorest 50%, while the richest 10% holds about four times the wealth of the poorest 50%. In addition, wealth inequality in Greece has increased between 2009 and 2017. At the same time, both average and median wealth shrunk by one third, while the share of wealth-poor and hand-to-mouth households increased by about 20%. Our factor inequality decompositions suggest that, despite being relatively evenly distributed, real wealth holdings caused much of the increasing trends in wealth disparities in the country. Conversely, while highly unequally distributed themselves, financial assets played an insignificant role in the wealth dynamics. The findings of the paper carry implications for the design of appropriate policies aiming to increase household resilience and underline the role of asymmetries in real and financial asset holdings for the effectiveness of economic policies.

Importance of the Contingent Claims Analysis in Detecting Banking Risks: Evidence from the Greek Bank Crisis

Abstract In this paper we apply the Contingent Claims Analysis (CCA) to the banking sector in Greece with a particular focus on the years of the Greek debt crisis. Greece was selected primarily because its banking sector was hit hard due to the country’s government debt default and its large exposure to domestic loans. The results obtained on the SIB’s level and on the banking sector level gave us particular insight into the benefits of CCA for micro- and macroprudential policy reasons. The Distance-to-Distress (DtD) risk metric produced is particularly useful for detecting banks’ vulnerabilities and resilience before they are revealed in the market. Moreover, the reduced volatility of DtD time series makes it an ideal candidate for tool predictions purposes and ultimately for policy reasons.

The international spillover behaviour of implied volatilities and forecasting ability of spillover indices

ABSTRACT In this study, we investigate the spillover behaviours of implied volatilities and test the forecasting power of spillover indices. By using a Diebold and Yilmaz’s (2012) framework, we capture a better overall picture of the developments of spillover effects and create a series of spillover indices by quantifying the spillover intensity for each rolling time window such that we are able to investigate the forecasting ability of spillover indices on market returns. There are several findings in this study including (1) the spillover indices of implied volatilities not only enable us to describe the spillover effects but also possess strong forecasting power on market returns, (2) implied volatilities which own emotional-related characteristic create stronger spillover mechanisms than spillover of market returns and (3) by observing the time-varying patterns of spillover indices of implied volatilities, we find that the peaks of spillover indices occur during well-known economic events such as the Lehman Brothers’ Bankruptcy and Greek debt restructuring.

Collective Remembrance and Private Choice: German–Greek Conflict and Behavior in Times of Crisis

When does collective memory influence behavior? We highlight two conditions under which the memory of past events comes to matter for the present: the associative nature of memory and institutionalized acts of commemoration by the state. During World War II, German troops occupying Greece perpetrated numerous massacres. Memories of those events resurfaced during the 2009 Greek debt crisis, leading to a drop in German car sales in Greece, especially in areas affected by German reprisals. Differential economic performance did not drive this divergence. Multiple pieces of evidence suggest that current events reactivated past memories, creating a backlash against Germany. This backlash also manifested in political behavior, with vote shares of anti-German parties increasing in reprisal areas after the start of the debt crisis. Using quasi-random variation in public recognition of victim status, we show that institutionalized collective memory amplifies the effects of political conflict on economic and political behavior.

Examining governance and performance of utility companies after mergers: a case from a municipal water company in Greece

This study deals with the governance and performance of utility companies following mergers in local government organizations (LGOs). It is demonstrated by using the municipal water supply and sewerage company in city of Serres as a case study of how the reform initiative known as “Kallikratis” has impacted Greek municipal water and sewerage companies. As a result of the Kallikratis Program, the municipalities were merged, and new data were added to the map of local government in Greece. The methodological approach entails surveying the economic analysis of raw data using a number of financial ratios (financial statements of the municipal company). The study’s findings demonstrate that the municipal company of Serres was able to plan the actions that resulted in an improvement of the majority of the examined ratios after merger events, despite the extra responsibilities and geographic areas that the Kallikratis Program added to the municipal companies and the reduction of the extraordinary subsidies as a result of the Greek debt crisis. Eleven of the fourteen ratios perform better than they did before the merger, while three of them actually perform worse (2011–2018). However, various and contradictory results about the evolution of these ratios are seen over the crisis era, as some of them initially show a partial improvement (in the midst of the economic crisis period), but then they gradually deteriorate by the end of the crisis.

Greek Banking Sector Stock Reaction to ECB’s Monetary Policy Interventions

Reacting to extreme uncertainty conditions caused by the global financial crisis, the European Central Bank implemented countercyclical strategy, combining conventional and non-traditional monetary policy tools to stabilize financial markets and euro area economies. We study the impact of the euro area monetary authority policy interventions on equity returns of four systemic Greek banks for the period January 2007 to August 2018. In the first step, we collect and classify interventions to several categories. Then, an event study analysis is carried out to evaluate cumulative abnormal returns. In the second step, a panel regression analysis is performed to identify Cumulative Abnormal Return (CAR) determinants. Our results suggest that expansionary conventional monetary policy interventions significantly affect equity returns of Greek banking institutions, assisting the regional banking equity stability. On the other hand, the harmful consequences of Greek debt crisis limited the effectiveness of non-standard measures.

Impact of Negative Tweets on Diverse Assets during Stressful Events: An Investigation through Time-Varying Connectedness

Tweets seem to impact diverse assets, especially during stressful periods. However, their interrelations during stressful events may change. Cryptos are apparently more sensitive to the sentiment spread by tweets. Therefore, a construct could be formed to study such complex interrelation during stressful events. This study found an interesting outcome while investigating three major asset classes (namely, Equity, Gold and Bond) alongside negative sentiment (derived from tweets of Elon Musk) and Dogecoin (an emerging asset class) from 1 June 2015 to 20 February 2022. Negative sentiment emerged as the significant risk transmitter, while Gold emerged as the significant net recipient of shocks (risk). Interestingly, Dogecoin was found to be less impacted and not impactful (not transmitting shock and receiving tiny shocks) at the same time. In fact, the interconnectedness between negative sentiment (percolated through Twitter) and Dogecoin prices was found to be rather feeble. Further, the study showed that the COVID-19 breakout and Brexit referendum in 2016 were less stressful events compared to the Greek debt crisis back in 2015.

The Greek debt crisis: Excusable vs. strategic default

The Greek debt crisis revealed that sovereign default is not limited to emerging and developing countries. Can we take the strategic default model, developed for emerging markets, and recalibrate it to explain the crisis in Greece? The Greek economy differs from an emerging market in having higher government debt relative to GDP, counter-cyclical government debt, and consumption smoother than income. Our recalibrated strategic default model matches the high debt/GDP, but it misses the other two features of advanced countries. And it fails to generate a crisis. We propose an alternative model, replacing the absence of commitment to repay with commitment. Default occurs due to inability to repay and is excusable. Our alternative model of excusable default allows us to match the behavior of debt and the spread as the crisis approaches, as well as key features of business cycles in advanced countries. It also generates a crisis with correct timing.

Debt crisis, age and value relevance of goodwill: evidence from Greece

PurposeThe purpose of this study is to investigate the value relevance of goodwill and its additional aspects during a long-term period in Greece. Furthermore, by implementing two of the most popular value relevance models, the Ohlson’s price and Easton and Harris’ return model, this study examines the impact of goodwill on Greek stock prices from 2007 to 2018, a period of 12 years in which International Financial Reporting Standards (IFRS) are applied. Furthermore, this study analyzes how goodwill’s value relevance changes as it ages and during the Greek debt crisis.Design/methodology/approachIn order to test the value relevance of goodwill we implemented two of the most popular value relevance models, Ohlson’s price and Easton and Harris’ return model. Our sample consists of non-financial listed Greek companies that reported positive goodwill accounting balances on their financial statements during the financial period from 2007 to 2018. Finally, we applied fixed-effects regression model to all equations.FindingsThe results provide evidence that the year-end goodwill accounting balance is value relevant, and that the debt crisis has improved goodwill’s information content. Finally, the empirical findings suggest that only current year acquired goodwill is value relevant compared to older goodwill, and therefore, goodwill’s impact on stock prices is decreasing as it ages.Research limitations/implicationsA noteworthy limitation of this study is that it focuses on a specific code-law country Greece, which is a relatively small economy compared to the whole Eurozone. This research contributes to the research literature as it confirms other research findings in the European context and specifically that goodwill based on IFRS is value relevant to financial statement users. Additionally, it investigates for the first time how goodwill was affected by the Greek debt crisis. Finally, it contributes to other researcher’s debate concerning the duration of goodwill’s value relevance in a code law environment such as Greece.Practical implicationsFinancial analysts and institutions are provided with more assurance about goodwill’s financial reporting quality to be embedded in the financial evaluation process of corporates. As this research confirms that goodwill should be regarded as an asset, companies should obtain better financial ratings from financial institutions and investors and thus will have better access to equity and debt funding.Originality/valueWe investigate the value relevance of goodwill in Greece during a long-term period of 12 years. Additionally, our study examines the impact of the Greek debt crisis on the information content of goodwill accounting balances and the period during which accumulated goodwill balances and within-year acquired goodwill maintain its value relevance. Our research could assist accounting standard setters such as the International Accounting Standard Board to evaluate the quality of specific standards such as IFRS 3 “Business Combination” and IAS 38 “Impairment of Assets.”

Nemačka u multipolarnom svetu i strateške opcije Srbije

The paper analyzes the position of the Federal Republic of Germany in international relations today and based on that policy, possible guidelines for the Republic of Serbia in its strategic actions in the upcoming period are given. The first goal of the research was to consider the relationship of official Berlin to the European Union, the United States, Russia, China and the rest of the world. Berlin's tendency to further strengthen the institutions, monetary, foreign and defense policy of the European Union has been present for decades. However, since 2008, that policy has been going through constant challenges. The Greek debt crisis, Brexit, the migrant crisis, the recession, a new wave of debts by European countries due to the Covid-19 pandemic and the war in Ukraine have put the authorities in Berlin in a difficult position. The failure of Germany and France to establish a unified EU security policy, the impossibility of peace initiatives around Ukraine and the consistent monitoring of Washington's policy have limited the EU ability to project power in other parts of the world. In addition to Russia, it is also obvious that the growing antagonism towards the People's Republic of China has been noticed recently, which threatens to affect very good economic relations The second goal of the paper is to offer Serbia's strategic options based on global trends, and in the context of German policy towards the Western Balkans. The Serbian focus on the European integration and the proclaimed policy of neutrality with a strong commitment to the European peace can be an incentive for joint affairs of the two countries. Particularly problematic is Berlin's attitude towards the self-proclaimed independence of the interim institutions in Prishtina. The opposing positions of Germany and Serbia, however, can be attributed to various regional initiatives such as the Berlin Process and particularly the Open Balkans. The attempts to further escalate the conflict or confrontation of Serbia towards the environment would adversely affect the position of Serbs in the surrounding countries and would also weaken economic exchange, which is traditionally oriented towards the European countries. However, official Belgrade should also work on strengthening internal capacities, primarily defensive, economic, administrative and demographic, so that it can have a high level of readiness in case of possible challenges.

The debt crisis, austerity measures, and suicide in Greece

AbstractBackgroundHow are economic downturns and suicide related?ObjectiveThis study examines the link between economically driven austerity measures implemented during a recent economic downturn—the Greek debt crisis—and suicide for the population as a whole, as well as for men and women separately.MethodsUtilizing a 50‐nation panel containing annual suicide counts and population demographics for the years 1995–2015 from the World Health Organization's Mortality archive, the analysis employs a synthetic control design, a quasi‐experimental approach that allows us to causally model the relationship between Greece's International Monetary Fund‐imposed austerity measures and suicide, something that has hampered prior research efforts.ResultsFindings show austerity policies corresponded with increased suicide rates in Greece for the population as a whole and for men and women. Robustness tests confirm these results.ConclusionsWe discuss the implications of the findings for the current economic crisis associated with the COVID‐19 pandemic.

MEASURING CONTAGION BETWEEN ENERGY AND STOCK MARKET DURING FINANCIAL CRISIS: ASYMMETRIC DYNAMICS IN THE CORRELATIONS

This paper deals with the study of the Asymmetric Dynamic Conditional Correlation (ADCC) model developed by Cappiello et al. (2006). The A-DCC models carry out better than the non-asymmetric ones. The methodological design is an appropriate multivariate vector and autoregressive exponential GARCH (M-VAR-EGARCH) process which investigate the nature of the volatility and return spillover mechanism across markets. This article examines the dynamic linkages between the stock market and oil price in the US and the Euro-Zone from January 2, 2004 to July 5, 2013. The findings support the existence of a contagion effect during the Greek debt crisis but not the subprime crisis. The correlations between oil prices and stock return of the financial market reveal a certain degree of interdependence among oil market that is lower during the debt crisis.