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Document de travail 2017-3

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

Raphaël Hekimian

Résumé :

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.

Classification JEL : G21, G01 , N20

Mots-clés : Banking crisis, Financial History, Great Depression

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