o_19heefouak9i9v4do11ac41pi7a.pdf

KONSTANTINOS I. LOIZOS
my but to examine the latter in relation to the patterns of change in development
banking operation in the country.
Hence an interesting exercise would be to compare the trends followed by the GDP
growth rate and the rate of change of crucial financial data for the three banks. We
think that these data should include the evolution of net profits, loans and security
holdings, all expressed in terms of their respective rate of change. The question is
whether there is any correspondence between the three phases of Greek economic and
institutional development described above and the evolution of banks’ net profits and
their two main operating indicators. In addition, possible overshooting of the securities
component during the years of financial deregulation –overshooting compared to
the evolution of GDP growth rate– might also be an indirect indicator of the effect of
financial development on the operation of the banks. Given this double task, both
serial trend and statistical analysis will prove to be useful.
Figure 11a: Rates of change in ETEBA net profits, and GDP
Source: ETEBA Annual Reports and author’s calculations
Figure 11a, which presents GDP growth rates and net profit change rates for
ETEBA, shows that the rate of change of ETEBA’s net profits is almost entirely
positive until 1973, with the exception of a slightly negative figure (-4.96%) for
the year 1968 and a more negative (-36.55%) for the second year of operation,
1965. This picture contrasts with the subsequent continuous fluctuation between
positive and negative values during the period 1974-97 which is followed by positive
rates of growth of net profits for the period 1998-99 and subsequently negative
rates in 2000-01. Hence, the pattern of ETEBA’s rate of change of net profits
conforms to that of GDP growth for the pre-1974 period and also to some degree
for the period 1974-94. However for the period after 1994 and especially for the
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