The abolition of official minimum loan rates in French banking

Authors

  • D.A. ALHADEFF

DOI:

https://doi.org/10.13133/2037-3643/11701

Keywords:

French banking system, minimum loan rate, policy, reform, competition

Abstract

In 1965 the French authorities introduced the first of a series of reforms to the structure and operations of the French banking system, one of which was the abolition of the official minimum loan rate on discounts and advances. The elimination of the floor rate on bank loans has been widely acclaimed as a major move towards greater competition in French banking. The present paper evaluates the probable market impact of this reform. To this end, both the market structure and market behaviour of French short-term business loan markets are examined. The author first analyses the market structure of loan markets in France both before and after two recent major reforms of the banking structure. Market behaviour under the minimum loan rate is then examined and the relation of minimum loan rates to actual loan rates, to competitive loan rates, and tot he rates that probably would have prevailed if there had been no official loan rate controls is shown.


JEL: G21, G28

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Published

2014-03-01

How to Cite

ALHADEFF, D. (2014). The abolition of official minimum loan rates in French banking. PSL Quarterly Review, 20(82). https://doi.org/10.13133/2037-3643/11701

Issue

Vol. 20 No. 82 (1967)

Section

Editorial

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