EconPapers    
Economics at your fingertips  
 

Another “French paradox”: explaining why interest rates to microenterprises did not increase with the change in French usury legislation

Arvind Ashta (), Laurence Attuel-Mendès () and Zaka Ratsimalahelo ()

European Journal of Law and Economics, 2015, vol. 40, issue 3, 479-509

Abstract: Conventional wisdom indicates that the growth of credit may not materialize if credit rates remain capped by usury laws, as had long been the case in France. France therefore abolished usury ceilings on loans to microenterprise in an effort to increase financing for microentrepreneurs. This should have led to an increase in interest rates and increase in microcredit. However, we do not find any increase in interest rates and this is therefore a paradox. The paper provides a brief literature review and the salient features of the legislative changes in France. It follows this up with a presentation of interest rate movements. The discussion of possible explanations of the paradox includes classical market analysis (global interest rates, money supply, and competition), behavioral and institutional analysis (guarantees, Basel II and risk taking, legal concept of abusive support, protection for over-indebtedness, information asymmetry and limited liability) and softer institutional reasons (religion, risk-taking culture). Copyright Springer Science+Business Media New York 2015

Keywords: Microfinance; Microcredit; Usury; Behavioral finance; Law and economics; Institutional analysis; Interest rate; B52; B59; E4; G21; K00 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s10657-013-9387-y (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Another "French paradox": explaining why interest rates to microenterprises dit not increase with the change in French usury legislation (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:ejlwec:v:40:y:2015:i:3:p:479-509

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10657

DOI: 10.1007/s10657-013-9387-y

Access Statistics for this article

European Journal of Law and Economics is currently edited by Jürgen Georg Backhaus, Giovanni B. Ramello and Alain Marciano

More articles in European Journal of Law and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2021-04-26
Handle: RePEc:kap:ejlwec:v:40:y:2015:i:3:p:479-509