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Assessment of the impact of Tier 1 and Tier 2 regulatory capital issues of Greek banks for the period 2002-2020

Citation:

Kenourgios D, Savvakis G. Assessment of the impact of Tier 1 and Tier 2 regulatory capital issues of Greek banks for the period 2002-2020. In: Volume of essays in honour of the late Professor Ch. Tsoumas. Patra, Greece: Hellenic Open University; 2022.

Abstract:

The article investigates the impact of the issuance of Tier 1 and Tier 2 regulatory capital by Greek banks for the period 2002-2020 on the return on assets (ROA), return on equity (ROE), leverage ratios (SLR) and liquidity and funding ratios (NSFR), by taking also into account the changes in the macroeconomic environment with variables such as GDP and unemployment. In this context, we perform data analysis on 14 systemic and non-systemic Greek banks and we find that capital ratios of banking institutions affect profitability, asset quality and earnings, liquidity and leverage. Bank size, loan-to-deposit ratio and NPLs ratio are important determinants of banks’ profitability. Finally, unemployment is an important exogenous determinant of profitability ratios.