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Enhancing the Benefits of Financial Liberalisation in Belgium

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  • Stefan Ide
  • Jens Høj
  • Patrick Lenain

Abstract

The Belgian financial landscape has been transformed over the past two decades and now consists of a relatively large, well-functioning and internationally integrated financial sector contributing directly and indirectly, through its intermediary function, to long-term economic growth. One of the financial system’s key characteristics is the concentration of activity among a small number of financial conglomerates that offer a combination of banking and insurance services. Although this mix of activities may contribute to financial stability, it has led to a widespread commercial practice of crossselling, possibly dampening competitive pressures. Competition may also be hindered by regulatory policies in the markets of mortgage loans and consumer credit; although these policies aim at protecting consumers against the risk of over-indebtedness, they risk having the unintended consequence of increasing entry costs for new providers, thus hindering competition and innovation and hurting consumer interests. Besides regulatory policy, tax policy has also been used to shape the development of the financial system. Tax credits are granted to influence investment and borrowing decisions, notably to stimulate home ownership, encourage saving and stimulate private pension accounts. International experience suggests that such tax expenditures, while influencing the allocation of saving, have no obvious impact on the overall level of saving. However they result in significant tax expenditure and necessitate higher tax rates elsewhere. Reforms recommended in this paper would help to make a well-functioning system perform even better. Renforcer les avantages de la libéralisation financière en Belgique Le paysage financier belge s’est transformé au cours des deux dernières décennies et se caractérise aujourd’hui par un secteur financier relativement important, fonctionnant bien et intégré au niveau international, qui contribue directement et indirectement, par sa fonction d’intermédiation, à la croissance économique à long terme. L’une des principales caractéristiques du système financier est la concentration de l’activité au sein d’un petit nombre de conglomérats financiers qui offrent simultanément des services bancaires et des services d’assurance. Bien que cette combinaison d’activités puisse contribuer à la stabilité financière, elle a conduit à une pratique commerciale très répandue, la vente croisée, qui peut atténuer les pressions concurrentielles. La concurrence est peut-être aussi entravée par les dispositions réglementaires concernant les marchés du crédit hypothécaire et du crédit à la consommation ; bien que ces dispositions aient pour objet de protéger les consommateurs contre le risque de surendettement, elles peuvent avoir pour conséquence involontaire d’accroître les coûts d’entrée pour les nouveaux prestataires, et de limiter ainsi la concurrence et l’innovation tout en portant atteinte aux intérêts des consommateurs. Outre la politique réglementaire, la politique fiscale a été utilisée pour façonner le développement du système financier. Des crédits d’impôt sont accordés pour influencer les décisions d’investissement et d’emprunt, en particulier afin de stimuler l’accession à la propriété du logement, encourager l’épargne et promouvoir la constitution de comptes retraite privés. L’expérience d’autres pays donne à penser que ces dépenses fiscales, si elles influent sur l’affectation de l’épargne, n’ont pas d’impact manifeste sur son niveau global. Or, elles se traduisent par d’importantes dépenses fiscales et obligent à relever les taux d’imposition dans d’autres domaines. Les réformes recommandées dans le présent article contribueraient à améliorer encore le fonctionnement du système, qui est déjà satisfaisant.

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File URL: http://dx.doi.org/10.1787/034117657485
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 588.

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Date of creation: 20 Dec 2007
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Handle: RePEc:oec:ecoaaa:588-en

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Keywords: government regulation; consumer welfare; competition; information and market efficiency; efficacité de la Communication et du marché; réglementation de l’administration; concurrence de l’aide sociale;

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