Working Paper: CEPR ID: DP16698
Authors: Emilie Bonhoure; Hadrien Clausse; Eric Monnet; Angelo Riva
Abstract: France during the 1920s was characterized by exceptional expansion of bank branches, with access to banks developing rapidly in rural areas due especially to establishment of temporary branches. However, it did not translate into increased bank assets and deposits as a share of national income. The banking crisis of the Great Depression ended the network expansion and reversed part of it, but the number of bank branches remained four times greater than before the war (though the French population was similar in 1910 and 1930). The distinction between indicators of credit or deposits on GDP and indicators of the density of the banking network challenges the thesis of the Great Reversal and improves understanding of the evolution of the banking system during the interwar period. We argue that inflation and increased competition explain the disconnect between the evolution of branches and the real volume of banking activity.
Keywords: banking; French financial history; bank branching; Great Depression
JEL Codes: G21; G34; N14; N24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Inflation (E31) | Expansion of bank branches (G21) |
| Competition among banks (G21) | Expansion of bank branches (G21) |
| Expansion of bank branches (G21) | Stagnation of banking assets and deposits relative to GDP (F65) |
| Expansion of bank branches (G21) | Geographical phenomenon (R12) |