Non—Banking Financial Institutions and Capital Markets

There is no doubt that banks are the most important players in the financial services industry. In fact, non-bank financial sectors (insurance companies, mutual funds, investment firms, etc.) make up only a very small part of the Greek financial system. However, given the linkages of these sectors with banking as well as with the overall economic development, the present chapter provides a brief discussion of the recent trends in these sectors. Furthermore, Section 3.3 discusses the developments in capital markets, focusing on the Athens stock exchange (ASE) and the market for government paper. The conditions in the stock exchange can influence the banking sector through various avenues. First, the stock exchange can be an alternative source of funds for corporations. Second, as most of the Greek banks are publicly listed their stock market capitalization depends on the conditions in the ASE. Considering that Greek banks traditionally maintain important positions in government paper issued by the Greek state, the developments in this market can have important implications for the sector.