The French Stock Market in War

David Le Bris
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David Le Bris: Paris-Sorbonne University, France

No 09-01, Working Papers from Association Française de Cliométrie (AFC)

Abstract: It is interesting to identify the extreme cases of changes in the stock exchange caused by wars. Stock return depends on how the war is financed. The Franco-Prussian war was financed only by regular debt thus stocks reflected only situations of real activity. WWI was partially financed by short term debt; however, since capital markets kept their freedom, stock prices can be adjusted. WWII and the German occupation was also financed by short term debt from the Banque but in a closed market: stocks prices increased. War affects not only return but structural characteristics of the market too. The Franco-Prussian war caused a durable all high interest rate, WWI changed the amplitude of stock movements and WWII affected the components of markets. After WWI and WWII, the importance of stock markets in the economy decreased. WWI is the major event affecting markets during the twentieth century; a contrefactual hypothesis of a quick German victory can help to understand the real price of victory.

Pages: 28 pages
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:afc:wpaper:09-01

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