The Global Financial Crisis and the European Sovereign Debt Crisis revisited from the perspective of credit supply in Portugal

Both the Global Financial Crisis and the European Sovereign Debt Crisis have significantly impacted the monetary and credit conditions within the Eurozone.As result of the losses suffered on their portfolios as well the lack of confidence within the financial system, funding became more costly and difficult to obtain for banks, and therefore they decreased their credit supply to non-financial corporations and households.Considering the importance of well-functioning credit markets for growth and macroeconomic stability, as well the decisive role that the restarting of credit plays in economic recovery after a downturn, there is a growing interest on the impact that recent crises have performed on bank supply of credit.Despite the relevance of the issue, we cannot find however significant literature for the specific case of Portugal.Trying to fill that gap, with this study we intend to provide a deep approach on the topic, by investigating to which extent the banks operating in Portugal and more vulnerable to the dry up in the interbank markets and to the sovereign debt shock have reduced lending to non-financial corporations during the period of the Global Financial and the European Sovereign Debt Crisis, respectively.