Efficiency and Productivity Change in Greek Banking: Methods and Recent Evidence

This chapter examines the most recent developments pertaining to the efficiency and productivity of Greek banks. In this context we discuss some of the trends characterizing the Greek banking sector since the early 1990s and review the relevant empirical evidence. The Greek banking sector has recently undergone significant transformations that resulted in an extensive deregulation process and wide structural reforms. Over the 1990s the integration process in the context of the run up to the Economic and Monetary Union (EMU) and the increasingly competitive euro-area environment has contributed to raise banks’ concerns about their overall performance, efficiency, and productivity. As in other European countries, Greek banks have responded to these exogenous pressures with a wave of consolidation and privatization: between 1996 and 2003, 16 mergers and acquisitions took place, and seven out of ten state-owned banks were privatized (Garganas, 2003). Furthermore, banks have strived to improve their customer base by looking for new markets (e.g., in the Balkans) and providing a range of new, non-traditional products and services, such as insurance, underwriting, asset management, and so on.