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Top1. Introduction And Literature Review
The economies of several countries, even in the euro area, were deteriorated after the USA crisis in 2008 as indices, debt-to-GDP and deficit-to-GDP, worsen dramatically. In 2009, the newly elected socialist government in Greece publicized that the deficit-to-GDP ratio of the country was over 16% instead of the 4% which was officially reported by the conservative administration. The need for a bailout was inevitable and the so-called Troika (ECB, EC and the IMF) came to fill-in the funding needs of the country as the markets did not trust the Greek securities to invest. In return, Greece had to follow the implemented austerity programs set by the Troika. However, the sovereign crises turned into a banking a crisis as there was a massive withdrawal of deposits and an outstanding increase of Non-Performing Loans. Although Greece is only a small member state within the euro area, the adoption of the Euro currency implies certain obligations for all member states. Nevertheless, several recent studies show that the impact of bad news about Greece has effect in all euro area economies.
Polyzos, Abdulrahman and Christopoulos (2018) examine a series of banking crises in the USA and Europe. To test the determinant factors for bank viability they employ an agent-based model in distressed periods. Their investigation covers both management and financial factors which affect institutions’ capability to overpass difficult periods. The findings of their predicting risk model are in line with previous studies. Magnis and Iatridis (2017) use banks from the USA, UK, Germany and France to investigate manipulation issues in banks based on two dimensions, the earnings and capital management. They find that auditor reputation restricts the motivation for earnings manipulation while they also prove that banks in the post–Basle II period limit earnings and capital adequacy management. Ladas, A., Negkakis and Samara (2017) use a sample of banks from the Eurozone countries to examine the relationship between capital structure, stock crash-risk and deferred taxation. To do so they apply stock crash risk measures and they find that the recording of deferred tax components can lead to capital structure and to future stock crash risk. They also show that banks with high deferred tax assets have lower future stock crash risk in the case of crisis-affected countries, implying that deferred tax can reflect better future stock crash. Finally, banks domiciled in crisis-affected countries with capital-structure problems and high deferred tax assets have more possibilities of future crash risk.