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The Crisis of Sovereign Debt in the Euro Zone: Effect on the Banking Sector

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  • Besma Hamdi

    (University of Sfax)

  • Sami Hammami

    (University of Sfax)

Abstract

In this article, we examine the sensitivity of the banking sector to the exchange and interest rates in the short and long term in the four countries affected by the sovereign debt crisis of the euro zone, such as Greece, Ireland, Portugal, and Spain during the 2006–2014 periods. The ordinary least squares (OLS) method is applied to examine the effect of these variables on the banking sector of each country. The empirical results show that the exchange and the short and long-term interest rates have a significant and negative impact on the banking sector in times of crisis. These three variables have a significant role in the worsening of the crisis.

Suggested Citation

  • Besma Hamdi & Sami Hammami, 2018. "The Crisis of Sovereign Debt in the Euro Zone: Effect on the Banking Sector," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(3), pages 822-832, September.
    • Handle: RePEc:spr:jknowl:v:9:y:2018:i:3:d:10.1007_s13132-016-0373-9
    DOI: 10.1007/s13132-016-0373-9
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