6533b829fe1ef96bd128a552
RESEARCH PRODUCT
Another "French paradox": explaining why interest rates to microenterprises dit not increase with the change in French usury legislation
Laurence Attuel-mendesZaka RatsimalaheloArvind Ashtasubject
060106 history of social sciencesMonetary economicsBehavioral economicslaw.inventionUsuryInformation asymmetry[ QFIN ] Quantitative Finance [q-fin]JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages[SHS.DROIT]Humanities and Social Sciences/LawlawEconomicsInstitutional analysis0601 history and archaeologyJEL : B - History of Economic Thought Methodology and Heterodox Approaches/B.B5 - Current Heterodox Approaches/B.B5.B59 - Other050207 economicsmedia_commonusury050208 finance[QFIN]Quantitative Finance [q-fin]Limited liability05 social sciences1. No povertybehavioural finance06 humanities and the artsJEL: B - History of Economic Thought Methodology and Heterodox Approaches/B.B5 - Current Heterodox Approaches/B.B5.B52 - Institutional • EvolutionaryInterest rateJEL : K - Law and Economics/K.K0 - General/K.K0.K00 - General8. Economic growth[SHS.GESTION]Humanities and Social Sciences/Business administrationJEL: B - History of Economic Thought Methodology and Heterodox Approaches/B.B5 - Current Heterodox Approaches/B.B5.B59 - OtherJEL: E - Macroeconomics and Monetary Economics/E.E4 - Money and Interest RatesEconomics and Econometricsmedia_common.quotation_subjectMoney supplyLegislationBasel IIConventional wisdom[ SHS.DROIT ] Humanities and Social Sciences/LawJEL : E - Macroeconomics and Monetary Economics/E.E4 - Money and Interest Rates0502 economics and businessBusiness and International Management[ SHS.GESTION ] Humanities and Social Sciences/Business administrationFinanceMicrofinancebusiness.industryJEL : G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G21 - Banks • Depository Institutions • Micro Finance Institutions • MortgagesJEL : B - History of Economic Thought Methodology and Heterodox Approaches/B.B5 - Current Heterodox Approaches/B.B5.B52 - Institutional • Evolutionarylaw and economicsinstitutional analysismicrofinancemicrocreditJEL: K - Law and Economics/K.K0 - General/K.K0.K00 - GeneralbusinessLawinterest ratedescription
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).
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2015-12-01 |