IDEAS home Printed from https://ideas.repec.org/p/drm/wpaper/2017-3.html
   My bibliography  Save this paper

The French banking sector during the interwar: What lessons can be drawn from the stock market?

Author

Listed:
  • Raphaël Hekimian

Abstract

The aim of this paper is to provide new insights on the French banking crisis of the1930’s. This crisis is usually considered in the literature to have been relatively more limited in France than in other European countries. One feature of the French banking system at that time was the specialization of its activities: French banks were, for the most part, either deposit or business banks. The literature highlights the fact that business banks faced the greatest difficulties because they invested in foreignmarkets. The purpose of this article is to test this hypothesis with a new dataset of stock prices by estimating the risk on i) the aggregated banking sector; ii) on two subsamples, one including only deposit banks and the other one, only business banks and iii) on the individual series. We find that during the 1930’s, business banks were indeed more risky than deposit banks, relative to the overall market.

Suggested Citation

  • Raphaël Hekimian, 2017. "The French banking sector during the interwar: What lessons can be drawn from the stock market?," EconomiX Working Papers 2017-3, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2017-3
    as

    Download full text from publisher

    File URL: http://economix.fr/pdf/dt/2017/WP_EcoX_2017-03.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Le Bris & Pierre-Cyrille Hautcoeur, 2010. "A challenge to triumphant optimists? A new blue chips Index for the Paris stock-exchange (1854-2007)," Post-Print halshs-00754455, HAL.
    2. Billio, Monica & Getmansky, Mila & Lo, Andrew W. & Pelizzon, Loriana, 2012. "Econometric measures of connectedness and systemic risk in the finance and insurance sectors," Journal of Financial Economics, Elsevier, vol. 104(3), pages 535-559.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    4. Hautcoeur, Pierre-Cyrille & Sicsic, Pierre, 1999. "Threat of a capital levy, expected devaluation and interest rates in France during the interwar period," European Review of Economic History, Cambridge University Press, vol. 3(1), pages 25-56, April.
    5. David Le Bris & Pierre-Cyrille Hautcoeur, 2009. "A challenge to triumphant optimists? A blue chips index for the Paris Stock-Exchange (1854-2007)," PSE Working Papers halshs-00586765, HAL.
    6. Bertrand BLANCHETON, 2005. "Les faux bilans de la Banque de France dans les années 1920," Economic History 0503004, University Library of Munich, Germany.
    7. Turner,John D., 2014. "Banking in Crisis," Cambridge Books, Cambridge University Press, number 9781107030947.
    8. Jacques Marseille, 1980. "Les origines « inopportunes » de la crise de 1929 en France," Revue Économique, Programme National Persée, vol. 31(4), pages 648-684.
    9. Accominotti, Olivier, 2012. "London Merchant Banks, the Central European Panic, and the Sterling Crisis of 1931," The Journal of Economic History, Cambridge University Press, vol. 72(1), pages 1-43, March.
    10. Eugene N. White, 2007. "The Crash of 1882, Counterparty Risk, and the Bailout of the Paris Bourse," NBER Working Papers 12933, National Bureau of Economic Research, Inc.
    11. Stefano Battilossi, 2009. "Did governance fail universal banks? Moral hazard, risk taking, and banking crises in interwar Italy1," Economic History Review, Economic History Society, vol. 62(s1), pages 101-134, August.
    12. Le Bris, David & Hautcœur, Pierre-Cyrille, 2010. "A challenge to triumphant optimists? A blue chips index for the Paris stock exchange, 1854–2007," Financial History Review, Cambridge University Press, vol. 17(2), pages 141-183, October.
    13. Eugene N. White, 2007. "The Crash of 1882 and the Bailout of the Paris Bourse," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 1(2), pages 115-144, July.
    14. Mark Billings & Forrest Capie, 2011. "Financial crisis, contagion, and the British banking system between the world wars," Business History, Taylor & Francis Journals, vol. 53(2), pages 193-215.
    15. Kroszner, Randall S & Rajan, Raghuram G, 1994. "Is the Glass-Steagall Act Justified? A Study of the U.S. Experience with Universal Banking before 1933," American Economic Review, American Economic Association, vol. 84(4), pages 810-832, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patrice Baubeau & Eric Monnet & Angelo Riva & Stefano Ungaro, 2021. "Flight‐to‐safety and the credit crunch: a new history of the banking crises in France during the Great Depression," Economic History Review, Economic History Society, vol. 74(1), pages 223-250, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raphaël Hekimian, 2017. "The French banking sector during the interwar: What lessons can be drawn from the stock market?," Working Papers hal-04141670, HAL.
    2. G. Bazot & M. D. Bordo & E. Monnet, 2014. "The Price of Stability. The balance sheet policy of the Banque de France and the Gold Standard (1880-1914)," Working papers 510, Banque de France.
    3. Jérémy Ducros & Angelo Riva, 2014. "The Lyon Stock Exchange: A Struggle for Survival (1866-1914)," PSE Working Papers halshs-00960528, HAL.
    4. Bazot, Guillaume & Bordo, Michael D. & Monnet, Eric, 2016. "International shocks and the balance sheet of the Bank of France under the classical gold standard," Explorations in Economic History, Elsevier, vol. 62(C), pages 87-107.
    5. Calomiris, Charles W. & Flandreau, Marc & Laeven, Luc, 2016. "Political foundations of the lender of last resort: A global historical narrative," Journal of Financial Intermediation, Elsevier, vol. 28(C), pages 48-65.
    6. Grossman, Richard, 2017. "Stocks for the Long Run: New Monthly Indices of British Equities, 1869-1929," CEPR Discussion Papers 12121, C.E.P.R. Discussion Papers.
    7. Richard S. Grossman, 2015. "Bloody foreigners! Overseas equity on the London Stock Exchange, 1869–1929," Economic History Review, Economic History Society, vol. 68(2), pages 471-521, May.
    8. Markus K. Brunnermeier & Isabel Schnabel, 2014. "Bubbles and Central Banks: Historical Perspectives," Working Papers 1411, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 31 Oct 2014.
    9. Olivier Accominotti, 2019. "International banking and transmission of the 1931 financial crisis," Economic History Review, Economic History Society, vol. 72(1), pages 260-285, February.
    10. William Quinn, 2019. "Squeezing the bears: cornering risk and limits on arbitrage during the ‘British bicycle mania’, 1896–8," Economic History Review, Economic History Society, vol. 72(4), pages 1286-1311, November.
    11. Richard S.Grossman, 2017. "Beresford’s Revenge: British equity holdings in Latin America, 1869-1929," Wesleyan Economics Working Papers 2017-003, Wesleyan University, Department of Economics.
    12. Maxime Merli & Antoine Parent & Cécile Edlinger, 2021. "Portfolio advice before modern portfolio theory: The Belle Epoque of French analyst Alfred Neymarck," Business History, Taylor & Francis Journals, vol. 63(7), pages 1197-1221, September.
    13. Georges Prat & David Le Bris, 2019. "Equity Risk Premium and Time Horizon: what do the French secular data say ?," Working Papers hal-04141877, HAL.
    14. Campbell, Gareth & Quinn, William & Turner, John D. & Ye, Qing, 2015. "What moved share prices in the nineteenth-century London stock market?," QUCEH Working Paper Series 15-06, Queen's University Belfast, Queen's University Centre for Economic History.
    15. Georges Prat & David Le Bris, 2019. "Equity Risk Premium and Time Horizon: what do the French secular data say ?," EconomiX Working Papers 2019-8, University of Paris Nanterre, EconomiX.
    16. repec:hal:spmain:info:hdl:2441/5uiggte9218fho46bb53jr7m8a is not listed on IDEAS
    17. Jérémie Cohen‐Setton & Joshua K. Hausman & Johannes F. Wieland, 2017. "Supply‐Side Policies in the Depression: Evidence from France," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(2-3), pages 273-317, March.
    18. Albrecht Ritschl, 2012. "War 2008 das neue 1929? Richtige und falsche Vergleiche zwischen der Großen Depression der 1930er Jahre und der Großen Rezession von 2008," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13, pages 36-57, May.
    19. le Bris, David & Goetzmann, William N. & Pouget, Sébastien, 2019. "The present value relation over six centuries: The case of the Bazacle company," Journal of Financial Economics, Elsevier, vol. 132(1), pages 248-265.
    20. Rebecca Stuart, 2024. "Measuring stock market integration during the Gold Standard," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 18(1), pages 191-220, January.
    21. Kuvshinov, Dmitry & Zimmermann, Kaspar, 2020. "The Big Bang: Stock Market Capitalization in the Long Run," CEPR Discussion Papers 14468, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Banking crisis; Financial History; Great Depression;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G01 - Financial Economics - - General - - - Financial Crises
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:drm:wpaper:2017-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valerie Mignon (email available below). General contact details of provider: https://edirc.repec.org/data/modemfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.