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Has the Composition of the Greek Banking Sector Investment Portfolio Contributed to the Greek Economy Financial Crisis?

Has the Composition of the Greek Banking Sector Investment Portfolio Contributed to the Greek Economy Financial Crisis?
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Author(s): Nikolaos Eriotis (National and Kapodistrian University, Athens, Greece), Konstantinos Kollias (Democritus University of Thrace, Greece) and Theodoros Kounadeas (National and Kapodistrian University, Athens, Greece)
Copyright: 2021
Volume: 8
Issue: 2
Pages: 11
Source title: International Journal of Corporate Finance and Accounting (IJCFA)
Editor(s)-in-Chief: Apostolos G. Christopoulos (Department of Business Administration, University of the Aegean, Greece), Constantin Zopounidis (School of Production Engineering and Management, Technical University of Crete, Greece & Audencia Business School, France) and Kyriaki Kosmidou (Aristotle University of Thessaloniki, Greece)
DOI: 10.4018/IJCFA.2021070101

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Abstract

The banking sector in Greece met a large growth and provided the Greek economy with a vital push after the credit release. The galloping increase of private, business, and public loans reinforced business activity and offered high incomes for a few years. However, this push that the Greek economy experienced was based on consumption and not on the development of financial sectors that could constantly produce income for the economy and the state. The research examines the Greek banking investment portfolio from 2003 until 2017 based on the portfolio theory of Markowitz. Furthermore, it evaluates its differentiation and examines whether or not has contributed to the financial crisis that the domestic economy faced the previous decade. The findings point out that the negative portfolio returns during the span of seven out of 15 reviewed years and their covariances highlight that the portfolio diversification was not successful according to Markowitz's theory.

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