The Impact of the Financial Crisis on Portuguese Banks: The Problem of Portuguese Sovereign Debt
This chapter aims to analyze the effects of the 2008 financial crisis on the Portuguese financial system. The impact was twofold. On the one hand, the expansionary tax policy that followed increased the need for government funding and there was a trend toward recourse to the wholesale credit market. On the other hand, banks’ usual resources dried up (e.g., the interbank monetary market), pushing these institutions into much more expensive funding (for instance, bond issues), therefore squeezing financial intermediation rates. The huge increase of Portuguese government debt (well above 100%) led to a crisis of sovereign debt.
KeywordsGross Domestic Product Euro Area Banking Sector Public Debt European Central Bank
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