The purpose of this paper is to re-examine the profitability of Greek banks (updating Eichengreen and Gibson (2001)) using a panel of Greek banks over the extended period to 2003 instead of 1993-1998 as in the original paper. We argue that the period since 1998 has largely been one of consolidation with the tendency for lower concentration which began in 1985 being reversed somewhat. Whilst this might suggest a decline in the degree of competition, two factors have countered this: the sector has moved further away from being dominated by one leader; and another wave of new entrants has occurred. The results of the econometric analysis suggest that profitability is becoming more persistent, that banks with stronger market power earn higher profits and that the impact of size on profitability is much weaker than in the earlier period when growing bigger clearly increased profitability.
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Article provided by Bank of Greece, Economic Research Department in its journal Economic Bulletin.
Find related papers by JEL classification: G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
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