European Banks in Challenging Times1
Dinner speech
prepared for the Workshop "New Challenges for the Euro"
Villa Vigoni, 20-23 July, 2017
Claudia M. Buch
Deutsche Bundesbank
1 Setting the stage
The global financial crisis has been a watershed for internationally active banks. The
banking industry is undergoing profound structural change, reflecting technological
change and adjustment to the withdrawal of (implicit) subsidies in banking sectors.
Strengthening banks' capital and liquidity buffers - and thus private buffers to absorb
shocks that materialize - has been a core element of the post-crisis reform agenda. Such
policies are aimed at reducing the probability of failure for banks, particularly
systemically important firms, and mitigating the impact of failure on the financial system
and the real economy. Ultimately, a credible withdrawal of implicit guarantees for
institutions deemed to be "too big to fail" requires establishing procedures for the recovery
and resolution of financial institutions. Adjustment to these factors is taking place at
different speeds depending on the degree of friction present and the competitive situation
in the respective banking and financial sectors.
The post-crisis adjustment of banks has been shaped by the interaction of initial structural
conditions, shocks, policy responses, and long-term trends in financial markets. Initially,
the financial crisis hit as a major shock to liquidity on wholesale funding markets. Yet, it
soon became evident that some institutions and markets were affected more structurally
and that many banks were, in fact, facing solvency problems. At the macroeconomic level,
several shocks interacted, leading to a decline in credit demand and supply, and evolving,
in some regions, into a full-fledged sovereign debt crisis. Following the initial shock in
2008 and 2009, recovery in the period from 2010 to 2013 was asymmetric. Strong capital
flows vis-à-vis emerging markets were accompanied by an increasing fragmentation of
euro area banking markets (Lane and Milesi Ferretti 2017). Declining capital flows have
been accompanied by a shift in the structure of capital flows away from bank lending
towards equity flows and, in particular, foreign direct investment (FDI) (Bussiere, Schmidt
and Valla 2016). The changing patterns of global shocks explain why it was only over time
that the fault lines of certain business models of banks became visible. At the current
juncture, the global banking system has built up larger capital and liquidity buffers to
withstand future shocks. But low interest rates and high valuations are creating an
environment conducive to risk taking and to an underassessment of risks.
European banks have different strategies for operating in global financial markets and
have thus been affected quite differently by the financial crisis. Graph 1 shows that, on
average, European banks have scaled down the volume of their (gross) assets and liabilities
quite significantly by about two-thirds in nominal terms. This decline has been
aboveaverage for banks from countries such as Germany and Switzerland, and below-average
for banks from France or the United Kingdom. Changing patterns of bank globalization
have not only affected the intensive margin but also the extensive margin: The volume of
cross-border bank mergers, both within and outside the EU, has declined significantly
when comparing the pre- and the post-crisis periods (ECB 2017).
These trends in global banking markets are interacting with changing patterns of
integration in the real economy. Over the past decades, international trade has expanded,
production has become global, and value added chains have spanned across a larger
number of countries (Baldwin 2016). Longer and more complex global value added chains
can have implications for the volatility of production. What is therefore needed is a better
understanding of how risk-sharing and the integration of global banking markets interacts
with the globalization of non-financial firms.
Different structural features of banking systems prior to the crisis had an impact on how
banks adjusted to the new environment. Banking systems differ with regard to their
degree of competition domestically and their exposure to international markets. Some
banking systems were weakly capitalized or were weakly profitable even before the crisis.
In many cases, banks in the countries concerned consolidated their international
operations after the crisis. Banking systems in some countries had stronger buffers against
risks prior to the crisis; banks there often seized the opportunity to expand into new
markets.2
Policy responses after the crisis differed significantly across countries, reflecting both the
need for intervention and the political support for different policy options. Some
policymakers intervened early on in order to restore the financial institutions' capital; in
other cases, policymakers intervened more cautiously, perhaps in the hope that the
situation in which the banks found themselves would improve over time (Borio 2016). As
a consequence, structural weaknesses, legacy problems, and poor returns have persisted
for many banks in the post-crisis period.
Generally speaking, a distinction can be made between policy responses that were agreed
upon globally and those where national discretion was exercised. Macroprudential policy
has been established as an important new policy field after the crisis, and key
responsibilities lie at the national level. Also, and despite international coordination and
standard setting, national policy remains responsible for dealing with the recovery and
resolution of banks. This degree of national discretion needs to be taken into account
when assessing the effects of policies on outcomes.
Given the complexity of the issues at stake, this paper needs to be selective. I will address
the following issues:
First, ten years after the crisis, I will show indicators which reveal where we stand in
terms of adjustment in the real economy and the financial sector. The evidence will turn
out to be mixed. Progress has been made with regard to cyclical recovery and financial
sector reforms. But underlying structural issues, such as high debt levels and subdued
productivity growth, remain on the agenda. At the same time, heterogeneity in
adjustment across banks, markets, and countries is substantial.
Second, I will describe the channels through which the banking sector and real
performance interact. Sufficient market dynamics, in both the financial sector and the real
economy, are needed to promote investment and productivity growth. What is needed is
an environment that encourages the private sector to undertake productive investments.
Such investments are inherently risky, hence mechanisms are required to share risk while
preventing excessive risk taking. The Capital Market Union can be an important project
for improving private sector risk-sharing mechanisms in Europe. Concrete implications
for national policies may differ, given the heterogeneity in adjustment that can be
observed. Moreover, analyzing the interaction between the real and financial sector based
on aggregate time trends is difficult. Understanding the effects of structural change in the
real and financial sector on market dynamics, the entry and exit of firms, and sectoral
reallocation as an engine for economic growth requires disaggregated data. Such data
show that the weak performance of banks and of the real economy is two sides of the
same coin.
Third, enhanced evidence-based policy has a vital role to play at the European level.
Given limited fiscal resources, it is important to understand "what works" and what
constraints actually hold back investment and growth. Good evidence is needed to assess
the effects of financial sector reforms and to improve the quality of public spending for
real economic development.
2 Ten years after the crisis - where do we stand?
The global financial crisis that began ten years ago had many causes. As was the case for
many financial crises in history, high levels of debt which were inconsistent with real
economic fundamentals were a key propagation mechanism. Recessions which have been
triggered by debt-financed booms tend to be more protracted and deeper than normal
recessions (Reinhard and Rogoff 2014; Schularick, Jordà and Taylor 2013).
Debt levels and the financial sector
Reducing debt to sustainable levels has thus been a key goal of post-crisis financial sector
reforms. Nevertheless, progress in deleveraging has been slow, and debt levels remain
high. General government debt relative to GDP has increased globally (Graph 2). The rise
in the share of public debt is the result of outright rescues of financial institutions, fiscal
spending, and/or a decline in underlying growth dynamics. It reflects the fact that, during
the crisis, risks were shifted from the private to the public sector.
Patterns of adjustment of private sector debt have differed across countries and sectors
(Graph 3). There are few countries in which there has been a significant deleveraging of
the private sector. Such deleveraging trends often mirror the increase in private sector
lending prior to the crisis: While lending boomed, for example, in Spain or Greece, it
declined relative to GDP in Germany. To a large extent, private credit is channeled
through the banking system, including loans from non-residents (Graph 4). This increase
in foreign assets and liabilities reflects the increasing globalization and integration of
banking markets. This allows better risk-sharing and allocation of capital across countries.
But high volumes of foreign borrowing may also reduce reform incentives and lead to a
misallocation of credit.3 Moreover, the degree of cross-border risk sharing through credit
markets remains limited, and the integration of bank retail markets has not progressed
much in the post-crisis period (ECB 2017).
Given the importance of banks as intermediaries of private sector credit, the leverage of
banks is a major factor contributing to the stability of finance. Highly leveraged financial
institutions have weaker buffers against shocks and may react in a more procyclical
manner. Higher capital in the financial sector does not necessarily reduce the probability
of crises occurring, but it limits the real and fiscal costs of crises (Jorda, Richter,
Schularick, and Taylor 2017). Graph 5 shows that the leverage of banks increased on
impact during the crisis because losses materialized and wiped out part of the banks'
capital buffers. Especially in countries with high rates of loan growth before the crisis,
non-performing loans increased considerably after the crisis (Graph 6). Post-crisis,
leverage has decreased as a result of higher capital requirements and market pressure. Yet,
banks remain more highly leveraged than they have been in historical perspective.
Real sector adjustment
Turning to the real sector, the surge in private sector borrowing before the crisis is
reflected in high levels of growth. In this sense, pre-crisis trends in growth are an
insufficient benchmark for sustainable levels of growth after the crisis. During the crisis,
there was a fall in real GDP growth (Graph 7 and 8), which was driven to a large extent
by a decline in investment (Graph 9), and recovery has been only gradual. Comparing
investment patterns in Europe and the United States, Döttling, Gutierrez, and Phillippon
(2017) conclude that weak investment in the US is mainly the result of structural features
of the economy and of increased concentration. In Europe, weak investment is more
transitory, which is consistent with previous findings linking weak investment to debt
overhang.
Heterogeneity in terms of GDP growth and output gaps in the euro area which initially
increased during the crisis, has been declining (Graph 10).4 Convergence of GDP growth
implies that there is little convergence of income levels in Europe
In many cases, high growth rates have not been accompanied by improvements in
productivity (Graph 11). Over the past decades, productivity growth has slowed down,
and the euro area lags behind the US (McGowan, Andrews, Criscuolo, and Nicoletti 2015).
Differences in productivity reflect reflect differences in terms of spending on research and
development (R&D) (Graph 12) and in the number of researchers employed in R&D
(Graph 13). Notwithstanding differences across countries, R&D indicators have improved
in the post crisis relative to the pre-crisis period.
One important driver of productivity can be the exit of weaker firms and the market entry
of new, more productive firms (Cinera and Galgau 2005), which raises overall
productivity. The importance of market dynamics along the extensive margin for
productivity growth has been shown for the United States (Foster, Haltiwanger, and
Krizan 2001) and, more recently, China (Brandt, Van Biesebroeck, and Zhang 2012). Yet,
the contribution of entry and exit to productivity growth is mainly observable in high
growth episodes.5
Structural changes in the banking sector are likewise reflected in adjustment along the
extensive margin. Overall, the number of banks has been shrinking in most countries.
This downward trend is also due to a decrease in number of new banks. Based on US data,
Adams and Gramlich (2014) document a sharp drop in the number of new bank formation
across US-counties, which they attribute mainly to weak macroeconomic conditions. The
crisis has also changed the cross-border patterns of entry. Generally, banks from OECD
countries have been reducing their foreign presence while banks form emerging markets
have been expanding (Claessens and van Horen 2014). In general, faster growing host
markets are attracting more new foreign banks.
Summing up, post-crisis trends in the real and the financial sectors provide a mixed
picture. While growth has picked up, overall debt levels remain elevated. Growth remains
below the - possibly inflated - pre-crisis trends, and productivity growth is weak in many
regions.
3 Finance and growth: Is there a link?
Are trends in growth and finance linked and, if so, through which channels? Access to
finance in general and to bank lending specifically can have positive effects on growth and
productivity. Financial intermediaries provide services to the real economy by matching
savers and investors, by reducing information costs, and by transforming short-term
liabilities into longer-term credit. But this precise maturity transformation also makes
financial institutions inherently fragile and potentially subject to runs.
Empirically, the relationship between finance and growth is ambiguous. At low or
moderate levels of debt, positive growth effects dominate. As banking systems grow larger
relative to the size of the real economy, negative effects on growth appear. Hence, there
are non-linearities in the finance-growth relationship, and the link is insignificant in
high-income countries (Barajas, Beck, Dabla-Norris and Yousefi 2013). Three factors lie
behind these nonlinearities:
•
Composition of credit: While there is a positive and significant relationship
between enterprise credit and GDP per capita growth, empirical evidence shows
an insignificant relationship between household credit and growth (Beck,
Büyükkarabacak, Rioja and Valev 2012). In most high-income countries,
household credit has grown persistently over the past 20 years. This might partly
explain why the finance-growth nexus turns insignificant at high levels of
economic development.
•
Human capital: If the financial system grows (too) large relative to the real
economy, it may attract more young talent towards the financial industry - with
negative implications for human capital in other industries (Bolton, Santos and
Scheinkman 2016; Philippon 2010). Such a drain of talent is more likely to have
negative effects at high levels of financial development than in countries with
emerging financial markets.
•
Types of financial services: Positive growth effects are more likely if the financial
sector provides value added in terms of a reduction in frictions and transaction
costs. Negative effects are more likely if the financial sector engages in rent seeking
and regulatory arbitrage. Empirically, these drivers of financial sector expansions
are difficult to disentangle. Analyzing the contribution of the financial sector by
type of services provided shows that a larger share of credit to GDP tends to
increase growth and reduce volatility in the longer run (Beck, Degryse and Kneer
2014). Yet, an expansion of the financial sectors along other dimensions such as
increased mortgage finance has no discernible long-run effect on real sector
outcomes (Beck, Büyükkarabacak, Rioja, and Valev 2012).
Many of the factors that affect the growth-finance nexus are structural. Shocks hitting the
system can aggravate their effects. The financial crisis of 2008 and 2009 has indeed had
long-term negative effects on growth in OEDC countries, as captured by the loss in
potential output compared with the pre-crisis benchmark (Ball 2014). The hardest-hit
economies include countries which experienced banking crises such as Greece, Portugal,
Ireland, or Spain; other countries, such as Australia, emerged almost unscathed. Social
costs of financial crises are significant as well because unemployment increases and
because macroeconomic shocks have long-run effects on economic behavior and
risktaking incentives (Malmendier and Nagel 2011).
Ultimately, empirical studies based on aggregate data cannot illuminate the channel
through which the financial sector and the real economy are linked. Understanding why
financial crisis are costly requires understanding growth dynamics, the sorting and
selection of firms into new, profitable market segments as well as the factors driving
nonviable firms out of business. In essence, understanding Schumpetarian growth dynamics is
essential.
Booms and busts on markets and the associated misallocation of credit not only reflect
misaligned prices that can be corrected quickly. Rather, misallocation of credit leads to
the misallocation of investment, both real investment and human capital. Employees are
lured into sectors and firms that do not have viable business models. Once prices correct,
these investments need to be reversed, with painful adjustments required in terms of
employment and skills. Flexibility of the labor markets in terms of protection of workers,
not jobs, then becomes a crucial factor behind the speed and sustainability of the
adjustment process.
In Europe's bank-based financial systems, the strength of the banking sector has major
implications for real sector dynamics. Banks burdened with a large share of
nonperforming assets may "gamble" for resurrection by continuing to lend to their existing
customers. This may hamper access to credit for new (productive) firms. A high degree of
competitive pressure may induce banks to search for yield and to engage in excessive
risktaking. These issues might be aggravated if - implicitly or explicitly - banks benefit from
public subsidies and pursue politically motivated lending strategies.
Earlier empirical evidence documents the importance of bank-firm linkages for the
sectoral allocation of credit in Japan. In the 1990s, undercapitalized banks continued
lending to weak Japanese firms, thus retarding recovery in the real economy (Cabellero,
Hoshi, and Kashyap 2008; Peek and Rosengren 2005). More recent studies look at the size
of capital injections needed to address the issue and to discourage the evergreening of
loans (Gianetti and Simonov 2013).
Direct comparisons between Japan and Europe are difficult. Nevertheless, there is a
growing body of evidence suggesting that issues related to evergreening and distress
lending are features of European banking markets. For OECD countries, McGowan et al.
(2017) show that weakly performing firms have been attracting larger resources, with
negative consequences for the performance of stronger firms. Acharya, Eisert, Eufinger,
and Hirsch (2017) link the pattern in the data to unconventional monetary policies. Storz,
Koetter, Setzer, and Westphal (2017) focus on lending to SMEs and show that firms with
negative returns on asset and net investment increased their leverage in the period from
2010 to 2014.
Using Italian data, Schivardi, Sette, and Tabellini (2017) provide evidence in support of
weak banks lending to weaker firms.6 This misallocation of credit at the firm level does
not seem to be a key driver of the aggregate volume of credit. In contrast to earlier work,
the authors also look at firm entry and exit. They find that distress lending slows down
the exit of weak firms. This adjustment along the "extensive margin" may be a channel
through which credit allocation also affects overall performance. Moreover, misallocation
of credit was already observable before the onset of the financial crisis, which may have
been one factor behind sluggish TFP growth in Italy in the past decade (Calligaris, Del
Gatto, Hassan, Ottaviano, Schivardi 2016).
A potential misallocation of credit is, however, not confined to countries with weak
growth performance and high NPLs. Storz, Koetter, Setzer, and Westphal (2017) find an
increase in the leverage of weak firms in stressed economies (such as Greece, Ireland,
Portugal, Slovenia, and Spain) and in non-stressed economies (such as Germany and
France) alike.
4 Implications for Policy
Financial crises have large and long-lasting effects on the real economy. Just as there was
no single factor which triggered the crisis and which explains its severity, there is no
single explanation for the "missing" growth post crisis either. Finance certainly matters.
Finance matters for the reallocation of resources across sectors and for the sorting and
selection of firms that is behind Schumpetarian growth dynamics. Similar dynamics also
ensure that the financial sector can perform its role efficiently. Reforming the financial
sector and curing the causes of low growth can thus be two sides of the same coin.
a) Sufficient market dynamics can promote investment and growth.
For the financial sector, the key implication is that sufficient market dynamics need to be
ensured. Many of the trends that affect the financial services industry such as
globalization, the rate and nature technological change, and global macroeconomic
developments cannot be influenced directly by national policymakers. Hence, the key
question is whether the playing field provides sufficient flexibility for financial sector
firms to adjust to exogenous trends, to enable structural change, and to deal with legacy
issues.
Many of the post-crisis reforms have focused on these areas. Regimes for the recovery and
resolution of financial institutions have been reformed; increased capital buffers allow
institutions to better withstand adverse shocks; there has been an improvement in systems
for surveillance of risks in the banking and in the non-bank sectors. These reforms
contribute to the resilience of the financial sector and mitigate negative contagion effects.
Moreover, policies for dealing with non-performing loans facilitate an improved
allocation of resources. Insolvency regulation plays an important role in this regard, as
does the functioning of the secondary market for assets. But, ultimately, resolving the
issue of non-performing loans cannot be seen in isolation from an adequate capitalization
of banks.
In striking a balance between risk-taking by entrepreneurs in the real economy and
financial stability, equity finance plays a key role. In contrast to debt contracts, equity
contracts feature "automatic" risk-sharing mechanisms: investors benefit from positive,
upside risks but they can also lose their investments if a negative shock hits. In Europe,
equity markets in general and venture capital markets in particular remain
underdeveloped. Opportunities for cross-border risk-sharing are insufficiently exploited.
As regards incentives for investment and risk-sharing, the Capital Markets Union is a
project which provides a major opportunity. It can help to alleviate constraints on the
cross-border movement of (equity) capital; it can allow for more market-based
risksharing in Europe, and can help to alleviate constraints that currently hamper reallocation
in the real and financial sectors and prevent growth dynamics from being set into motion.
b) Structured policy evaluations are needed to assess the effects of post-crisis financial
sector reforms.
After the crisis, several major reform initiatives for the financial sector were launched. So
far, national and international bodies have focused on the monitoring of the
implementation of these reforms (FSB 2016). Answering the question of how financial
sector reforms have affected market dynamics and the real economy requires going a step
further. It requires a framework for the evaluation of reform effects, which makes it
possible to attribute observed trends in banking systems and financial markets to reforms,
while taking account of differences in adjustment across banks, countries, and over time.
One crucial objective of policy evaluation is the distinction between effects of reforms on
individual firms and effects on the financial system. (Short-term) costs of reforms for the
private sector such as costs of compliance are often more visible and easier to measure
than longer-terms benefits for society as a whole. Some of these benefits arise through
shifts in costs from the public to the private sector: withdrawing implicit public
guarantees for financial institutions increases the costs of debt because creditors cannot
rely on bailouts and thus demand higher risk premia. This will show up as a private cost.
Yet, society as a whole benefits if the financial system becomes more stable and if risk is
not shifted to the public sector.
The Financial Stability Board (FSB) has recently developed a framework which will form
the basis of internationally coordinated efforts aimed at assessing reform effects (FSB
2017). At their summit in July 2017, G20 Leaders expressed their support for this
framework for the post-implementation evaluation of the effects of the G20 financial
regulatory reforms (G20 2017). This framework will guide ex-post evaluation work by the
FSB and international standard setting bodies. The purpose of such evaluation work is to
ascertain whether the G20 financial regulatory reforms are achieving their intended
outcomes, and to help detect any material unintended consequences that may have to be
addressed, without compromising on the resilience objectives of the reforms. Among
other things, the framework identifies methods that are useful for policy evaluation and
discusses how well such methods address the challenges inherent in such analyses. The
framework also specifies processes to be followed in evaluation work.
To see why structured policy evaluation is needed, take the effects of increased capital
requirements which are a key element of the post-crisis reform agenda. Better capitalized
banks are more resilient and can lend more to the real economy. At the same time,
postreform trends in bank lending have differed across countries, banks, and industries. This
raises a number of questions: Has lending declined because of weaker credit demand? Are
banks lending more prudently? What has been the impact of regulations on stability and
growth? Does bank lending support sectoral reallocation - and thus growth? And what
has been the effect of increased non-bank competition? Aggregate time trends in lending
do not answer these questions - and do not provide a good basis for policy decisions.
Rather, the detailed data across jurisdictions and the empirical methods for (causal)
identification that are available can lay the basis for more informed policy decisions.
c) Better evidence is also needed in order to promote growth-friendly policies.
The need for good policy evaluation goes beyond the financial sector. In order to enhance
growth and productivity, incentives for investment and risk sharing are needed. Binding
constraints for investment and productivity growth need to be identified. Are funding
constraints, the lack of skilled personnel, or bottlenecks in the public infrastructure major
impediments for investment? What types of investments promise the biggest returns?
Answers to these questions have major implications for economic policy. Without good
answers, providing additional (public) funding might not alleviate the most binding
constraints and even lead to a misallocation of resources.
Enhancing evidence-based policy making in Europe, learning from best practice, and
establishing guidelines for good policy evaluations is a European project which promises
high returns. Policy evaluation is key, in particular during times of strained public
finances. Instead of emphasizing the volume of spending, focus should also be on the
quality of spending. The European Commission has a tradition of promoting
evidencebased policy making. Strengthening this approach and focusing on "what works" could be
an important step forward for Europe.
In Europe, there are several initiatives for promoting evidence-based policymaking. The
European Commission has formulated "Better Regulation Guidelines" which set out key
principles for evaluations with a requirement for qualitative, and where possible,
quantitative assessments of regulations and policy measures taken.7
Strengthening evidence-based policy-making at the European level can also build upon
and strengthen existing national initiatives. In the Netherlands, the Bureau for Economic
Policy Analysis (CPB) is an independent part of the ministry of economic affairs, which
regularly analyses the costs and benefits of policy initiatives. In Germany, the National
Regulatory Control Council (Normenkontrollrat) is tasked with the quantification of the
administrative costs of regulatory initiatives. It was founded as part of a government
program to reduce the costs of bureaucracy and to improve legislation (Bundesregierung
2006). This council recently proposed expanding the scope of its analyses as well as taking
into account total economic costs and second-round effects (such as effects on
competition, employment or R&D) (NKR 2015).
Better policy evaluations can have major benefits for the private and the public sector. For
the public sector, providing cost-benefit analyses and causal impact assessments is part of
accountability to the general public. For the private sector, policy evaluation can be
beneficial because it helps to focus policy initiatives on the relevant constraints and the
role that policy has in alleviating such constraints. This helps to focus attention on
relevant policy issues and in striking a better balance between the roles of the state and
the private sector. Policy evaluation does not change responsibilities for policy decisions
and implementation. Rather, the European level has an important role to play in terms of
providing guidelines for policy evaluation, coordinating evaluations across countries, and
providing access to information on evaluation results.
Graph 1: Cross-border claims and liabilities by country
Graph 1 shows the development of cross-border claims and liabilities by nationality of reporting bank. Data
are taken from the Locational Banking Statistics of the BIS.
Graph 2: Public debt (% of GDP)
Graph 2 shows the development of general government debt to GDP (as a percentage). Public sector
comprises central, state and local governments, and social security funds (without public enterprises). Debt
is obtained as the sum of the following liability categories (as applicable): currency and deposits, loans, and
debt securities. Vertical line separates the pre-crisis period (up to 2007) from the crisis period (as of 2008).
200
180
160
140
France
120 Germany
%
Greece
100
in
Italy
80
Spain
60
US
40
20
0
1999 2001 2003 2005 2007 2009 2011 2013 2015
Source: BIS (2017)
Graph 3: Private sector debt (% of GDP)
Graph 3 shows the development of private sector debt to GDP (as a percentage). Private sector comprises
non-financial corporations (both private-owned and public-owned), households and non-profit institutions
serving households. Vertical line separates the pre-crisis period (up to 2007) from the crisis period (as of
2008).
250
200
France
150 Germany
%
Greece
in
Italy
100
Spain
US
50
0
1999 2001 2003 2005 2007 2009 2011 2013 2015
Source: BIS (2017)
Graph 4: Private credit granted by deposit money banks (% of GDP)
Graph 4 shows the development of private credit provided by deposit money banks to GDP (