The primary role of banks is to provide loans, as fuel for the economy to run. In Greece, the bankruptcy and the memoranda that followed hurt the credit institutions, which have significantly limited the granting of loans, fearing that they will find themselves under pressure again.
Underfinancing creates conditions of suffocation in the market, while the governor of the Bank of Greece, Yannis Stournaras, often warns of the need to provide more loans and for banks to take on greater risk.
The financing of the eight-month period during 2022-2025 is significantly lower compared to the 8-month period of 2006-2009. The average net loan flows from banks in the 8-month period during 2006-2009 stood at 18.70 billion. In the 4-year period 2022-2025, the flows will reach 2.9 billion. That is, the current financing corresponds to 15.5% of the period 2006-2009.
In new business loan disbursements, the average was 10.07 billion euros. In the four-year period 2022-2025 it is 2.17 billion and corresponds to 21% of the period 2006-2009. Also, the average of net new mortgage loan disbursements in the same period of time during 2006-2009 was 5.67 billion. In the four-year period 2022-2025 it is negative and stands at -0.57 billion, which means that current disbursements are 11 times smaller than those in the period 2006-2009. It is worth wondering what happened to the 2 billion from the Recovery Fund loans, with which the banks were subsidized to provide housing in the My Home 1 and 2 programs. The picture is similar in consumer loans. The average of the period 2006-2009 was 2.79 billion, while in the corresponding period 2022-2025 the average is only 258 million euros.
Underfunding may work positively for banks – limiting risk – but for the economy it is a time bomb. Investments are not financed, the market is not supported and economic activity is languishing. Small and medium-sized enterprises complain that they are completely excluded from bank financing and they are right. Government efforts to change this picture have not been effective and despite the many programs financed by national and EU funds, the picture remains the same. Money stagnates in banks resulting in the lag seen in economic growth. And so far the fifth banking pillar that the government wanted to create and did create does not seem to radically change the picture, as the fear of bad loans is strong and is holding the balance.
