The Cyprus Experience in Dealing with Private Sector NPLs

Marios Clerides, Michalis Kammas and George Kyriacou
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Marios Clerides: Cooperative Central Bank of Cyprus
Michalis Kammas: Association of Cyprus Banks

Chapter 7 in Non-Performing Loans and Resolving Private Sector Insolvency, 2017, pp 127-156 from Palgrave Macmillan

Abstract: Abstract The chapter examines the experience of Cyprus in dealing with non-performing loans in the immediate years before and after the Eurogroup decisions of March 2013. Following a presentation of the structure of the domestic banking system and the events leading to the crisis, the paper investigates a number of institutional, legal, and behavioral factors that contributed to the high number of NPLs even before the crisis. The interplay of such factors points to serious weaknesses in the design and implementation of the regulatory and supervisory framework as well as in the operating environment and the institutional infrastructure, which led to the widespread practice of lending primarily on the basis of collateral and not on future cash flow, income, or ability to pay.

Keywords: Cypriot banking system; Non-performing loans; Banks’ balance sheets; Corporate loans; Household loans (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-319-50313-4_7

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DOI: 10.1007/978-3-319-50313-4_7

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