All posts by Periklis Gogas

Dr. Periklis Gogasis a frequent contributor to The Business Thinker magazine. He is an Assistant Professor of Economic Analysis and international Economics, Department of International Economics and Development, Democritus University of Thrace, Greece

Artificial Intelligence in Banking

Dr. Periklis Gogas

Professor, Dr. Periklis Gogas 



Anna Agrapetidou, Ph.D. Candidate


Professor, Dr. Theophilos Papadimitriou,


                                 Department of Economics  



 The problem

The health and stability of the banking sector is crucial in modern economies. Failures of systemically important financial institutions and generalized distress in even less significant banks can propagate to the whole sector very fast. These issues of distress, if not addressed swiftly and directly by the regulators (usually the central banks to associated specialized entities) may lead to wide-spread full economic crises and even international financial crises.

The U.S. banking sector

From 2000 to 2018 the total number of banking institutions in the U.S. decreased from 9,904 to 5,406 (more than 40%). This significant decline was the result of: a) an increased number of bank failures (more than 500 banks went bankrupt), b) a lack of new financial institutions entering the U.S. banking sector and c) a consolidation process through mergers and acquisitions. The financial crisis of 2007 highlighted the systemic effects of a banking crisis propagated in national (to other sectors of the U.S. economy) and international level (to other national economies around the world). Moreover, it raised serious concerns on the appropriate regulatory policies in effect and led to significant supervisory and regulatory reforms in an international scale (the Dodd-Frank Act and Basel III). Banking institutions are supervised, and their performance is monitored and evaluated by regulatory authorities through i) periodic stress testing, ii) the imposition of minimum capital requirements (Basel III), and iii) the implementation of prompt mandatory corrective actions when their financial position deteriorates significantly.

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The Visible Hand of the Government

Dr. Periklis Gogas,Professor of Economic Analysis and International Economics



Emmanouil Sofianos, Ph.D. candidate



Department of Economics, Democritus University of Thrace, Greece

Following the financial crisis and the great recession of 2008, income inequality has become a key concern for economists, governments and policy makers in most developed countries. Many believe that taxation may be unfair and ineffective. One of the main issues is that the taxation system and the redistribution of income through allowances, benefits and various transfers, instead of mitigating income inequality it is actually making the poor poorest and rich richer. Several recent estimates show what Oxfam (a development charity organization) stated earlier this year: in 2018, the world’s 26 richest billionaires own the same value of assets as the poorest 50% of the world population, i.e. 3.5 billion people. This number was 43 in 2017 and 61 in 2016, providing evidence of a growing gap between the rich and poor.

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What is the real cost of the Greek crisis?

Dr. Periklis Gogas
Associate Professor



Nancy Dimitriadou


Department of Economics, Democritus University of Thrace

The Greek debt crisis led to an unprecedented reduction in the country’s real GDP by 26.5%. This recession is one of the largest crises that the world economy has ever seen. For comparison, the Great Depression in the US in the later 1920’s resulted in a GDP reduction between 25% to 30%. Moreover, the Great Depression lasted for four years, while the Greek crisis reaches almost 8.

Simply stating that Greeks lost 26.5% of their income paints a gruesome picture. The true impact of the crisis is even worse. We compare current Greek real GDP to the one in 2009 just before the crisis. By doing so we are not taking into account a very significant stylized fact of every economy: growth. All economies show a strong positive trend in their GDP time series. This is the result of a steady growth in the factors of production, i.e. human and physical capital. The available human-working-hours increase due to population growth and the amount of physical capital stock also increases over time as a result of investment in fixed capital. Last but certainly not least, an additional very important factor for continuous growth is the improvement in technology. Technology significantly increases the productivity of both human and physical capital.

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Greek NPL’s: Is there light at the end of the tunnel?

Dr. Periklis Gogas Associate Professor


Dimitrios Karagiozis

Ph.D. Candidate

Department of Economics Democritus University of Thrace, Greece


The year 2018 is a milestone for Greece, as it moves towards to the completion of the third economic adjustment program. That means that after the official end of the program in August 2018, Greece must take fate into its own hands, and try to borrow from the markets to meet its future debt obligations. As the country leaves behind the 8-year long memorandum era, the two main concerns for the Greek government and the banking sector are: a) a decision on the debt relief measures that should follow and b) a solution to the Non-Performing Loans (NPL’s) problem.

The International Monetary Fund openly declares what anyone with basic training in economics can see: Greece requires substantial debt relief from its European partners to restore debt sustainability. The main issue here is that the resolution of this problem mainly depends on political decisions from Greece’s EU partners that are hard to sell to their voters-tax payers. This is of outmost importance for the medium to long term stability of the Greek economy. On the other hand, the NPL’s problem is urgent and imperative.

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Greek Banks in the Balkans: the big crunch

Ms. Athanasia Dimitriadou, M.B.A. Student – Specialization in Finance

Dr. Periklis Gogas, Associate Professor

Department of Economics


Democritus University of Thrace

Mergers and acquisitions are often used as a means of bank expansion both nationally and even more so internationally. Greece joined the EMU in 1999 and was in the first group of EU countries that abandoned their national currencies and adopted the euro in its physical form in 2002. From that point on the Greek banking sector became an integral part of the European monetary and economic union. There were multiple benefits from this integration. On the top of the list was the stability that was guaranteed by the European Central Bank (ECB) and its supervision mechanisms. This stability and the related risk minimization was reflected in the low financing costs of the European banks in general and Greek banks specifically. This fact significantly widened the spread between lending and deposit rates for Greek financial institutions so that profit margins increased. These margins were sufficiently large that Greek banks did not need to invest (at least not greatly) in financial instruments such as Asset Backed Securities (ABS) or other derivative financial instruments that appeared to have high yields. After the crash in the markets were these assets were traded they became widely known as “toxic bonds”.

Greek banks did not have a high exposure to these bonds as they found an alternative source of high revenues: the expansion to neighboring countries in the Balkans. These emerging economies started their financial liberalization process and opened their financial sector to international investors. In Table 1 below we report the most important investments of Greek banks in the Balkans before the Greek Debt Crisis. The five major Greek banks were very active in investing in the Balkans. These were more specifically: the National Bank of Greece, Eurobank, Piraeus Bank, ATE Bank and Alpha Bank. In the first column of Table 1, we present the Greek bank that invested in the Balkans, in the second column we report the acquired foreign bank, in the third column we report the country of the acquired bank and in the final column the percentage stake of participation. In all, fifteen banks were acquired in total or in a major stake by the five systemic Greek banks.

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Greece: Labor Market reforms and their impact on economic development.



Dr. Periklis Gogas, Associate Professor and



Mr. Panagiotis Mitrakoulis,


Senior Economics Student, Department of Economics
Democritus University of Thrace, Greece

Greece’s debt crisis, that started in 2010, is the longest and most severe in the country’s modern economic history. Since 2010, when Georgios Papandreou as the prime minister signed the first memorandum of understanding (MoU), Greece implements important fiscal adjustment measures combined with structural reforms.

Fiscal adjustment clauses aim to achieve balanced government budgets or primary surpluses that will help reduce the debt to GDP ratio. The complimentary, in the MoU, structural reforms are designed to increase productivity and international competitiveness. It will be very interesting to justify how labor market reforms, which are among the most painful and spark more public debates in Greece, bring the economy back to the road of development.

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Surprising Facts in Greek Export Analysis Dynamics


Dr. Periklis Gogas
, Associate Professor and



Mr. Orestis Piskioulis
Senior Economics Student


Department of Economics, Democritus University of Thrace

The significance of the analysis of the Greek exports’ evolution derives from the fact that exports play an indisputably important role in every small open economy like the one of Greece. It is apparent that exports of goods and services represent the value of all goods and other market services provided for the rest of the world. In effect, exports can have a major influence on the level and speed of economic growth, employment rates and consequently on the balance of payments.

During the course of the previous year, there was a decline in Greek exports by 5.1% to a total of €25.5 billion in comparison to the €26.9 billion a year earlier. However, after excluding the contribution of mineral oils, we have an increase of 7.8 % or to €17.9 billion as compared to the €16.6 billion in 2014.

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FDI: A potential driver of growth for the Greek economy

gogasDr. Periklis Gogas, Associate Professor,
Economic Analysis and International Economics

Mr. Stavros Hatzitheodoridis,

Senior Economics Student

Department of Economics, Democritus University of Thrace

Greece in a serious recession for the last 7 years. This is a world record for a developed economy. With the decline in wages, pensions and most significantly government spending the tools to overcome the recession are limited. In this situation, it is imperative to create a positive business environment and put forward the appropriate policies in order for Greece to attract foreign investors. Foreign Direct Investment (FDI) can be used as a shortcut to Greece’s recovery. FDI is essentially a new stream of influx that includes the transfer of capital. This capital inflows may be in various forms: physical capital, business and scientific expertise, new production methodologies, technology, etc. These assets play a significant role and greatly contribute to the economic development. They can enhance the a country’s production base bycreating economies of scale.

In their simplest and more direct form, FDIs create jobs which, in turn, create demand that subsequently leads to profits and new investments, new jobs etc. In the macroeconomics terminology these are called multiplier effects of the FDI on the economy. In a crisis striken country like Greece, domestic capital is limited. Moreover, for Greece, capital controls and the problematic banking sector resulted in a steep decline in domestic savings. These facts limit the ability of the country to start a virtuous cycle of investment, production, demand, consumption and increased income and employment. This is the main reason why FDI is vital, especially in a country like Greece.

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Greece vs EU: the Labor Cost Index


Dr. Periklis Gogas, Associate Professor

Ms. Sofia Christakidou
, Senior Economics Student

Department of Economics,  Democritus University of Thrace

What is the LCI?

In any economy, capital, labor and technology are the most crucial production factors in the supply process of all goods and services. ”The quarterly measured Labor Cost Index (LCI) is a Euro Indicator that measures the cost pressure arising from the production factor “labor”. The data covered in the LCI collection relate to total average hourly labor costs and to the labor cost categories labeled as “wages and salaries” and “employers’ social security contributions plus taxes paid minus subsidies received by the employer”. Data, also broken down by economic activity, are available for the EU as a total and EU Member States” (from the Eurostat website). All sectors of the economy are included with the exception of agriculture, forestry, fisheries, education, health, community and social/personal service activities. The LCI is a Laspeyre index. In other words it calculates the total cost of labor as a rate of change between a base year and the year we examine. For Greece this base year is 2012. The numbers in the Figure below are calculated as the arithmetic mean of the quarterly values. The vertical line shows the rate of change in costs of labor and the horizontal one the time that this change has occurred. The grey line represents the LCI for the Euro area countries and the orange one for Greece. The LCI, except from assisting enterprises in the decision making process, also helps European Central Bank and the European Commission to sense the stability of prices. The U.S. use a similar index, the ECI (Employment Cost Index) that is calculated by the Bureau of Labor Statistics.

What can we conclude from Greece’s LCI?

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Percentage of young people living with their parents

Dr. Periklis Gogas
is an  Associate Professor Department of Economics
Democritus University of Thrace


Ms. Anna Agrapetidou, is a Ph.D. Candidate
Economics, Democritus University of Thrace, Greece

The map shows the share of young people aged 25-34 living with their parents. As one can see, there are large differences across the European countries. For example, fewer than 2% of Danish young adults live with their parents while more than 50% of their Greek counterparts do. The percentage of young adults still living with their parents ranges from 1.8% to 56.6% across Europe. Slovakia has the highest percentage (56.6%) while Denmark has the lowest (1.8%). These differences may be driven by a combination of cultural and economic reasons.


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