APPENDIX I: Structure of the Banking Sector
APPENDIX II: Medium-Term Issues in the Banking Sector
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Prepared by C. Dziobek (MAE) and J. Levy (EU1).
This paper follows broadly the classification of institutions used by the Commission Bancaire Institutions are classified as (i) banks (i e, mainly commercial/universal banks), (ii) mutual or cooperative banks, (iii) savings banks (Caisses d’Epargne et de Prévoyance), (iv) municipal credit unions (Caisses de Crédit Municipal), (v) financial societies, and (vi) specialized financial institutions.
These are the Trésor, the Banque de France, the financial services of the Post Office, the Institut d’Emission des Départements d’Outre-Mer, the Institut d’Emission d’Outre-Mer, and the CDC.
While the staff of the Commission Bancaire makes recommendations about disciplinary actions, these have to be approved by the Commission (see Appendix 1 for the composition of the Commission).
The bankruptcy of Pallas-Stern in 1995 illustrates this issue The bank was privately owned and specialized in investment and private banking, its main owners were the oil company Elf, the insurance companies AGF, GAN, UAP, the commercial group Pinault-Printemps-Redoute, and several foreign banks. There was no agreement among the Pallas-Stern shareholders to recapitalize the bank, and the Commission Bancaire ultimately suspended the activities of the institution in mid-1995 Prompt action by the AFB enabled most depositors to be reimbursed within a few months.
For an assessment of the impact of monetary policy on credit, see Section III of this paper.
The ultimate causes of the worldwide asset inflation in the 1980s are unclear. Minsky (1982) suggests that asset inflation is a natural outgrowth of increasingly complex financial markets (new layers of intermediaries providing a de facto increase in financial liquidity—mainly to investors); most studies associate it with financial liberalization. Samiei and Schinasi (1994) study asset inflation in the United States and Japan following liberalization in the 1980s. Renaud (1995) suggests that increased liquidity in Japan led to capital outflows which added to pressures on commercial real estate in a number of industrial countries.
Private housing loans experienced less of a boom than the commercial real estate, although lending expanded in the late 1980s—the share of so-called “free” sector loans (i.e., non-official, non-subsidized) more than doubled in 1986–89, when it represented about one-third of total housing loans. House prices increased modestly over the cycle—except in Paris, where they showed steep increases, in particular in late 1990. By now, they have fallen back to their 1988–89 levels.