Abstract
The European banking system ran into significant difficulties when dealing with the current problematic European economy. Because of the swollen systematic risk, contagion was rife, resulting in the fragmentation of the financial and banking markets. The financial health of the banking system worsened. This resulted in two different, yet interrelated, processes: a credit crunch in the financing of the real economy and a huge banking deleveraging. In this chapter, contagion and systematic risk influences are analyzed, as well as the fragmentation of the financial market. It discusses the weakness of the European banking system while it describes the repercussions of the failure by banks to finance the real economy. Finally, it presents the banking deleveraging process.
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Petrakis, P.E., Kostis, P.C., Valsamis, D.G. (2013). Restoration of the Banking System and the Banking Deleveraging Process. In: European Economics and Politics in the Midst of the Crisis. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-41344-5_13
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DOI: https://doi.org/10.1007/978-3-642-41344-5_13
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