The Cyprus Experience in Dealing with Private Sector NPLs

  • Marios Clerides
  • Michalis Kammas
  • George Kyriacou
Part of the Palgrave Macmillan Studies in Banking and Financial Institutions book series (SBFI)


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.


Cypriot banking system Non-performing loans Banks’ balance sheets Corporate loans Household loans 


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Copyright information

© The Hellenic Bank Association 2017

Authors and Affiliations

  • Marios Clerides
    • 1
  • Michalis Kammas
    • 2
  • George Kyriacou
    • 3
  1. 1.Cooperative Central Bank of CyprusNicosiaCyprus
  2. 2.Association of Cyprus BanksNicosiaCyprus
  3. 3.Central Bank of CyprusNicosiaCyprus

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