Abstract: State and Banking for Firms' Financing in France, 1945-1970

Laure Quennouëlle-Corre

Abstract

It is known that after the Second World War French growth was largely fueled by significant state intervention in the economy and by public financing for business investments. The system created by the Treasury in the 1950s and continued in the 1960s was based on a strong union among public, semi-public, and private financial institutions under the Treasury's direction and the Ministry of Finance's powerful administration. The Ministry of Finance, one of the most important economic actors in France during this period, had been trying on the one hand to liberalize the system since the 1950s, but on the other hand, it did not want to harm the "circuit du Trésor" that allowed its administration to control the economic situation. This paradox can explain the stop-and-go policy between liberalization and regulation followed in this period. At the same time, the relationships between the State and the banks became so tight that they strengthened the banking cartel and increased banking's contribution in the financial system. During the 1950s and 1960s, banks began a revival that increased after the 1970s recession, when the French economy returned to the market economy it had had before the Great Depression of the 1930s. The French financial choice for economic development was not in favor of markets, but clearly for the largest deposit banks, which concentrated financial intermediation. The question is important primarily because of its consequences for French firms' financial dependence.