Concerns about Greece’s precarious financial state are not limited to the fellow euro-area countries mulling a bailout of the embattled country. North of the border, news agencies report that Bulgarian officials are worried about a flight of funds from Greek-owned banks in the country.

Around 30% of Bulgaria’s bank loan market is controlled by Greek lenders. If troubles at home force these banks to slow the flow of credit abroad, it will endanger Bulgaria’s already fragile recovery. The EIU expects GDP growth of only 0.6% in Bulgaria this year.

In the earlier stages of the credit crunch, officials in European banks’ home countries often worried about sour investments on the continent’s fringe—Swedish banks in the Baltics or Austrian lenders in eastern Europe, for example—forcing lenders to cut domestic credit. The Greek experience proves that the pain can just as easily flow the other way.

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