The economic crisis that was ignited in 2009 has ushered in an era of economic stagnation and social misery across much of the EU region that could last for a generation or more. As a result, governments in the recession-stricken Eurozone are struggling to find a viable way out of what is perceived to be the worst economic turmoil since the establishment of the EU. In Greece, the rippling effects of the crisis manifested themselves in a sovereign debt crisis accompanied by practically a collapse of its banking sector. This paper by using panel data analysis purports to explore and effectively shed some light on the key factors that determined the lending behavior of the banking sector in the pre-crisis period. To the best of our knowledge, there are hardly any empirical studies conducted on the role of banks over the period 2004-2010. The evidence yielded, relates credit growth to deposit growth and rising housing prices as well as banks’ capital strength. In so far as the business cycle affects lending growth, our results confirm that an ever increasing public debt results in curtailed lending while rising real private consumption kept Greek lenders’ volumes at high levels. Given the current banking sector restructuring that is taking place in Greece the evidence that is generated can be invaluable as it suggests alternative channels through which the battered banking sector could resume its main intermediation role.