Underground banking or hawala and Greece‐Albania remittance corridor
| Date | 11 October 2011 |
| Pages | 313-323 |
| DOI | https://doi.org/10.1108/13685201111173794 |
| Published date | 11 October 2011 |
| Author | Panagiotis Liargovas,Spyridon Repousis |
| Subject Matter | Accounting & finance |
Underground banking or hawala
and Greece-Albania remittance
corridor
Panagiotis Liargovas
Department of Economics, University of Peloponnese, Tripolis, Greece, and
Spyridon Repousis
Department of Economics, School of Economics and Management,
University of Peloponnese, Tripolis, Greece
Abstract
Purpose – The purpose of this paper is to study underground banking between Greece and Albania
and provide policy makers with specific policy recommendations to reduce hawala, reduce remittances
commissions and improve access of banking services to both remittance senders in Greece and
beneficiaries in Albania.
Design/methodology/approach – The authors measure loans to customers (non-banks), total
assets and net revenues from commissions, including remittances commissions, of a sample of
26 Greek commercial banks during 1996-2004 and examine recent remittances commissions of the four
largest Greek commercial banks and the Greek Postal Office.
Findings – Results indicate that Greek commercial banks charge less for remittances services than
Western Union, Eurogiro and hawala banking, although remittances are not a core business for them
(loans to customers – non-banks – are their core business).
Practical implications – Practical solutions are: lowering remittances commissions to Greek Postal
Office for low amount remittances; raising awareness of migrants on benefits of access to formal
banking system; implementing bilateral initiatives between Greece and Albania; facilitating
development of transfer mechanisms for remittances; promoting economic activities; increasing
transparency and offering insurance for remittances; and make it compulsory for employers to pay
legal and documented Albanian workers through migrant bank accounts. Also, Albania could support
the growth of ATMs networks, to increase access of people to more areas even to rural areas, where
remittance-recipient households receive most of remittances. On the other hand, Albania, could find
alternative sources to finance current account deficits, due to a possible future reduction of remittances
inflows.
Originality/value – The paper presents an explanation about low access of Albanian migrants in
Greece to remittances services offered by the banking system and suggests the implementation of
specific policies to banks and alternative formal money remittance service providers.
Keywords Greece, Albania,Migrant workers, Banks, Banking, Remittances, Hawala banking
Paper type Research paper
1. Introduction
Much has been said over the years on the negative implications of illegal economic and
banking activities, financial crime and fraud. There are significant economic and social
consequences of illegal banking activities such as underground banking or hawala.
The negative impacts are: increased crime and corruption to the country, weakening
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JEL classification – G14, G15, G21, J61, J21, J15, K42, H56, 017
Underground
banking
313
Journal of Money Laundering Control
Vol. 14 No. 4, 2011
pp. 313-323
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201111173794
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