Banking Policy and Commercial Bank Behaviour in Greece

Abstract

Although control of commercial banks is a feature to be found in all developed or developing economies, little attempt has to date been made to examine the implications of the variety of policy instruments employed for this purpose, on the behaviour of such institutions and hence on the extent to which stated objectives are achieved. Indeed, controls are often introduced, abolished or intensified on little more than an assertion of ability to identify the direction of impact of the measure in question, despite the fact that no clear perception, less so any precise quantitative appraisal, of the effect of the prior structure of controls exists.

This study comprises part of a set proposed by me in memorandum submitted to the Governor of the Bank of Greece in January 1977. Some of the analysis presented here was undertaken during short visits to the Bank of Greece in 1977 and 1978. The bulk of the study was, however, pursued in Oxford and hence the usual disclaimer that the Bank of Greece carries no responsibility for the views expressed here applies with particular force. I am most grateful to Professor Xenophon Zolotas, Governor of the Bank of Greece, for inviting me to the Bank and to Dimitros Halikias, Chief Economic Adviser of the Bank, for his refreshing interest in my work on Greece. A special debt of gratitude is due to Mrs Barbara Rhodis for her help with collection of much of the data here employed. I also thank Mrs E. Ringas and Mrs K. Marketou for typing drafts of this paper. Finally, I wish to stress that this paper was written before my appointment to the Government’s Committee on Interest Rates and does not, therefore, derive from views put forward in the Committee or recommendations to be made to the Minister of Coordination by the Committee.