The banking system´s monopolization of consumer credit in France: From face-to-face credit to economic identity checks
Sciences Sociales INRA Dijon, France
Relatively little is known of the contemporary history of consumer credit in France despite growing interest in the subject.
This face-to-face economy between shop owners and customers based on acquaintanceship networks was progressively superseded by a more formal system of credit, introduced by large department stores in the late nineteenth century and then by finance houses, primarily for motor car purchases in the inter-war years. The explosion of credit for consumer durables at the Liberation led the legislator to place these finance houses under the supervision of the Bank of France. However, outside of consumer credit for durable goods, what the authorities termed the ?black credit? system?direct credit granted by shop owners to their customers?continued on a massive scale until the 1970s.
The 1970s saw the banking system extend to the entire population through the progressive requirement for wages to be paid into bank accounts. Banks raced to set up networks to capture deposits and began to take an interest in this customer base of individuals, thereby inventing retail banking with the financial advisor as its central figure. New banking products emerged, with the generalization of current accounts, personal loans, overdrafts and finally of credit cards, which even today remain essentially payment cards.
The consumer credit market in France has therefore followed a very different path from the US model. Strong consumer protection laws have prohibited the sharing of files of all bank customers, thereby forestalling the creation of credit bureaus, which are at the heart of today?s financial crisis. This specificity slowed the automation of credit, limiting interbank cooperation to ?bad payer? files centralized by the Bank of France.
This monopolization of credit by banks and finance houses has led to the emergence of a bureaucratic and economic system of identity controls of consumers for what are ?remote? markets. Banks have become the implicit intermediaries in most transactions, guaranteeing the identity and solvency of those involved, and assimilating the vast majority of transactions to cash payments. Nowadays, in most case, Bank identification is the condition to enter the market.