Strengthening competition

The need to strengthen competition in several sectors of the Greek economy is increasingly pointed out by the Governor of Bank of Greece (BoG), Yannis Stournaras, who attributes to such absence of competitively higher prices in Greece than the rest of the Eurozone. In an interview he referred, in fact, to research by the BoG, which examined price spreads and profit margins and identified oligopolies in sectors of food, fuel, banks and private hospital care. The latest quarterly report of the Hellenic Parliamentary Budget Office also refers to the need to increase competition in order to lower prices, primarily of food.

Focusing on the area of responsibility of the BoG, Stournaras clarifies “we need more competition in the banking sector as well. We should empower smaller banks, and help them to merge so that they can compete with the four big banks. We need a 5th banking pillar”.

That fifth pillar includes Attica Bank and Pankritia, Optima, Viva and the ecosystem of cooperative banks. He also sees room “for other players to enter the banking sector, such as fintech and microfinance credit companies. Smaller banks that will finance small entrepreneurs”. He even points out that there is an understanding with the government and especially the Ministry of Finance on the need for increased competition in the banking sector.

The lack of competition is, of course, not limited to banks –Stournaras points this out. Nor is it a newly created problem. At first sight this may seem contradictory, but throughout its progress the Greek economy is characterized by the existence of many small businesses in some sectors (primarily in retail and catering) and a high concentration of production in others, such as manufacturing.

The role of small businesses in the development of post-war Greek industry is described by Lefteris Anastasakis in his book Industrial innovation & transformation in Postwar Greece (1950-1973). In its English version of the original Greek edition, the book aims to acquaint the non-Greek reader with the postwar economic history of Greece. It examines in-depth the technological content of postwar manufacturing  and challenges established prejudices prevalent in Greek economic historiography.