Academic journal article European Research Studies

Experience of Greece on Recapitalization of Banks, Marketing Management and Personnel Retraining in Conditions of Economic Recession

Academic journal article European Research Studies

Experience of Greece on Recapitalization of Banks, Marketing Management and Personnel Retraining in Conditions of Economic Recession

Article excerpt

JEL Classification Codes: GOO, G01, G21, HI2, H60, M31.

1. Introduction

In the globalizing financial economy the imbalances reflecting peculiarities, limitations and structural weaknesses in development of banking services markets and financial and credit sphere in general occur frequently. Banking systems of countries having emerging markets in conditions of crisis lose reliability and stability, have difficulties with capital and face the problems difficult to resolve (Allegret et al., 2016; Thalassinos et al., 2014; 2015a; 2015b; Thalassinos and Liapis 2014; Athanasenas et al., 2015; Boldeanu and Tache, 2016; Fetai, 2015). The authors define the institutional gaps in the regulatory system related to implementation of neoliberal economic policy conducted as a part of separate market space as the main causes of emerging risks and limitations in the banking sector (Giannarakis, 2016; Rupeika-Apoga and Nedovis, 2015; Theriou and Aggelidis, 2014; Duguleana and Duguleana, 2016).

In conditions of global financial risks implementation Greek banking system which had been created with active state participation reduced its financial stability to a large extent. National Financial Bank of Greece was formed in 1828 to control financial, credit and fiscal issues. The history of formation and development of Greek modern banking system is associated with creation of such large Greek banks as Bank of Attika, General Hellenic Bank, Bank of Central Greece, which served as a basis for the institutional design of national financial institutions. Stage-by-stage construction of credit-and-monetary regulation mechanism occurred in 1970-1990.

During this period the mechanism of credit-and-monetary regulation aimed at improving Greek banking system first of all according to the Bank of Greece line was being created and strengthened. Fixed final indicators of inflation and GDP growth rate were set as financial market regulators, the achievement of which was ensured by strict control over liquidity and objective information about the processes occurring in the sphere of country's credit-and-monetary regulation.

The processes of strengthening and grading the credit-and-monetary regulation legal framework were implemented in the course of financial institutions development. This policy allowed ensuring flexibility and autonomy of the exchange rate which was considered as a decisive factor in achieving strategic macroeconomic indicators.

In 1981 Greece joined the European Union, which defined the need for structural reforms in financial and credit system of the country. The Bank of Greece implementing a strategy of ensuring stable exchange rate introduces in this period restrictions on deposits in national currency for non-resident foreigners, on foreign currency debt of commercial banks, on obtaining external credits by national companies with aim of their reorientation to internal credit resources.

The entry of Greece into the Economic and Monetary Union on the 1st of January 2001 and into the Common European Currency area created real conditions for transition from economy of closed protective type to an open socially-oriented market economy.

The Bank of Greece has a special place in the banking system of the country; it has functions of credit-and-monetary policy development and implementation in order to achieve price stability and support of the state economic policy. State-controlled Greek banks such as National Bank of Greece and Emporiki Bank of Greece, private banks such as Alpha Bank and Piraeus Bank, as well as Eurobank Ergasias (with foreign participation) financial and credit services had a dominating role in the market of financial and credit services.

In connection with post-crisis changes in the banking and credit system of the European Union as well as appearance of financial imbalances the structural changes occur actively in Greek banking system; there is a search of instruments ensuring reliability of banks and transparency of financial transactions. …

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