o_19heefouak9i9v4do11ac41pi7a.pdf

DEVELOPMENT BANKING IN GREECE 1963-2002
Table 8: Average cost of debt: summary statistics
ETEBA Investment Bank ETBA
1965-74 1975-86 1987-93 1963-74 1976-86 1987-92 1967-74 1975-86 1987-1993
Mean 0.05 0.10 0.20 0.04 0.12 0.27 0.04 0.09 0.14
Median 0.05 0.11 0.18 0.04 0.14 0.23 0.04 0.10 0.14
Std. Dev. 0.01 0.02 0.04 0.02 0.03 0.14 0.005 0.02 0.03
Min. 0.03 0.07 0.16 0.01 0.08 0.15 0.04 0.06 0.11
Max. 0.06 0.13 0.25 0.07 0.15 0.48 0.05 0.12 0.18
The final indicator that we will examine is the usual debt/equity ratio which indicates
the degree of leverage of the banks.
To calculate this ratio we have included in the numerator only long-term borrowing
plus bond issues on which information is available in the financial statements
until the early 1990s, while the denominator consists of equity capital and reserves
(net worth). Given the previous analysis indicating the difficulty the banks
experienced in obtaining external finance on favourable terms, we would expect this
ratio to fall over time as we move to the liberalization era. The patterns that we obtain
again differ between the two private banks and ETBA.
Figure 9: Debt/equity ratios
Source: Author’s calculations
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