Greece passed a new low that allows non-bank financial institution (NBFIs) to lend money to households and businesses. Regarding non-banking financial institutions that somehow increase the concerns of the European Central Bank may be a just cause. The European Central Bank does not supervise these non-banking financial institutions in Greece. Problems like uncontrolled money lending is a concern but the Greece central bank is the main supervisor of those non-bank financial institutions (NBFIs).

ECB says:

„The growth of the NBFI sector over the last decade globally, including in Europe, is a source of concern. This is because, in general, the sector is opaque, which means that risks that are not within banking supervisors’ line of sight could be developing. These risks could include the build-up of synthetic and financial leverage, liquidity risks or correlation risk stemming from common exposures of banks and non-banks. “

The only concern is that this could lead to high risk lending because the rule of such credits are more relaxed compering standard bank loans. Banking rules and high interest rates in Greece have largely made it impossible or complicated to get a loan. Regarding the justification of such non-banking institutions is an advantage. The development of the Greek economy, as well as that of other low-income countries (LIC) in the region is difficult, and financial institutions like these have helped underdeveloped countries to develop rapidly.

IMF says:

„Banks had been the central focus of earlier financial sector, but the attention recently has been on a broader set of institutions says IMF. One of the more significant developments of the past decade and a half has been the growing importance of nonbank financial institutions (NBFIs). The development of the NBFI sector has differed across advanced, middle-income (MIC), and low-income countries (LIC). However, whatever shape and form their development has taken, the IMF’ given its mandate for safeguarding financial stability in its membership—has had to respond to this new trend.

Non-monetary financial institutions in Greece:

  • Insurance corporations;
  • Investment funds;
  • Portfolio investment companies (PICs);
  • Real estate investment companies (REICs);
  • Leasing companies;
  • Factoring companies;
  • Venture capital companies;
  • Credit companies.

A better financial sector and its services will reduce the development of such institutions. Despite this, these non-financial institutions currently have an advantage in providing better financial services than banks do.