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

Raphael Hekimian

No 2017-3, EconomiX Working Papers from University of Paris West - Nanterre la Defense, EconomiX

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.

Keywords: Banking crisis; Financial History; Great Depression (search for similar items in EconPapers)
JEL-codes: G21 G01 N20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his
Date: 2017
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