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KONSTANTINOS I. LOIZOS
Figures 12a, 12b and 12c show first, how closely long-term financing followed the
rate of economic growth, and second, how the latter was related to a financial development
indicator such as security holdings by the banks.
Figure 12a: ETEBA rates of change in loans
and investments in securities, and GDP
Source: ETEBA Annual Reports and author’s calculations
In Figure 12a, we see that the rate of change of ETEBA’s long-term loans generally
followed the path of economic development, though overshooting it in its early
years of operation. This can be justified by the pressing need for financing developmental
projects during the 1960s. However, during the subsequent years and especially
after 1974, growth rates of long-term loans follow the fluctuations in economic development
rates. The picture is different for the changes in security holdings. They
exhibit positive, and in some cases high rates of change both during the late 1960s to
early 1970s and the period after financial deregulation, especially during the late
1990s. The first should be attributed to the bank’s policy of buying securities of
funded enterprises as an alternative form of financing. The second seems to relate to
the wave of financial development that affected the operation of the bank.
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