The exchange rate exposure of Greek banking institutions

Article Abstract:

Keywords: Accounting research, Banking, Exchange rates, Risk, Share prices, Greece Exchange rate fluctuations affect the overall performance of banks through foreign currency transactions and operations. Nevertheless, even without such activities, exchange rate swings can influence banks circuitously, through their effect on the extent of foreign competition, loan demand and other banking conditions. In international finance, a firm's cash-flow exposure is described as transaction or economic exposure (Shapiro 1975). Transaction exposure is the risk that exchange rates can change in the short term between the time of foreign currency transaction is entered into and when it is settled. Economic exposure is the risk that exchange-rate changes will alter the long term future cash flows of a firm and, thereby, the value of the firm. It is surprising that, even though exchange rates are several times more volatile than inflation or interest rates, the association between firm value and exchange rates has not been the subject of much empirical research (Jorion 1990). More puzzling is that analyses thus far have failed to substantiate a statistically significant relationship. Some research has been performed investigating the exchange rate exposure of U.S and Japanese banks. However there is none, or very little research of investigating the issue in other countries. The scope of this paper is to investigate the structural relationship between the exchange rate exposure and the stock value of the main Greek banking institutions. This is one of the first such studies to investigate the impact of exchange rate exposure of Greek banking institutions. Furthermore, this study has a unique feature of performing direct analysis at the individual level, and not at the aggregate level as the study by Choi, Elyasiani and Kopecky (1992), which finds evidence of foreign exchange exposure when they aggregate bank returns. Finally, the research is particularly important for policy implications, since Greece is about to be integrated with the rest of European economies using the single currency euro.

Research, Methods, Stocks, Accounting, Risk management, Stock prices, International finance

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Using efficiency measures to distinguish among alternative explanations of the structure-performance relationship in banking

Article Abstract:

Four approaches were used to distinguish the benefits and limitations of three theories of such relationship between bank performance and market structure. Results showed support of the structure-conduct-performance theory, nonsupportive of the relative market power theory and supportive only of several conditions for the efficient-structure theory. The relationships have to be further evaluated since none of the data are completely consistent with prices, profits, market structure and efficiency relationships.

Management Theory & Techniques, Models, Management, Bank earnings

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The exchange rate exposure of Greek banking institutions

Article Abstract:

This study evaluates the impact of exchange rate variations on the stocks of Greek banks. Greek bank stocks are affected differently by these variations than the US dollar, Japanese yen and German mark.

Statistical Data Included, Foreign exchange rates, Securities, Valuation, Bank stocks

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