Ireland went from being the poorest member of the European Economic Community in 1973 to enjoying the second highest per-capita income among European countries by 2007. Healthy growth in the 1990s eventually gave way to a concentrated boom in property-related lending in the 2000s. The growth in the aggregate loan balances of Ireland’s six major banks greatly exceeded the growth in gross domestic product (GDP); as a result, bank loan balances grew from 1.1 times GDP in 2000 to over 2.0 times GDP by 2007. Given the small size of the domestic retail depositor base, the Irish banks increasingly funded loan growth using the wholesale market, despite its risks. The property-related lending boom proved unsustainable during the global financial crisis, and, on September 29, 2008, the government of Ireland took the unprecedented step of guaranteeing the deposits and substantially all other liabilities of the major Irish banks.
Zeissler, Arwin G.; Braun-Munzinger, Karen Anna Clara; and Metrick, Andrew
"Ireland and Iceland in Crisis A: Increasing Risk in Ireland,"
Journal of Financial Crises: Vol. 1
Iss. 3, 1-15.
Available at: https://elischolar.library.yale.edu/journal-of-financial-crises/vol1/iss3/1
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