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French Legislation And The Development Of Credit Availability For Microenterprise

Author

Listed:
  • Laurence Attuel-Mendes
  • Arvind Ashta

Abstract

The failures of the socialist model, evidenced by high unemployment, have led France to reorient itself towards more enterprise creation. These entrepreneurial ventures require financing. However, bankers do not want to assume the high risk of newly created enterprises. Moreover, small entrepreneurs who do manage to get financing may find themselves rationed at the margin if the rate of credit is capped by the legislature. Concurrently, the growth of microfinance in the world has shown that innovative techniques can increase credit availability, without unduly high risk. However, such increased credit availability may not materialize if credit rates are capped by usury laws, as it was in France. This paper traces out a number of legislative changes that took place in France in the last five years, focusing especially on usury laws and other barriers to credit. It places these legislative changes in a perspective of Western Europe’s socialist model, comparing legislation on credit and usury in a number of developed countries. It also examines if these legislative changes have been accompanied by the desired impact. Finally, it examines alternative future legislative evolution possibilities.

Suggested Citation

  • Laurence Attuel-Mendes & Arvind Ashta, 2008. "French Legislation And The Development Of Credit Availability For Microenterprise," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 2(2), pages 123-137.
  • Handle: RePEc:ibf:gjbres:v:2:y:2008:i:2:p:123-137
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    Citations

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    Cited by:

    1. Arvind Ashta & Djamchid Assadi, 2009. "Does Social Lending incorporate Social Technologies? The use of Web 2.0 Technologies in online P2P lending," Working Papers CEB 09-056.RS, ULB -- Universite Libre de Bruxelles.
    2. Tristan Caballero-Montes, 2023. "Integrating market conditions into regulatory decisions on microfinance interest rates: does competition matter?," Annals of Finance, Springer, vol. 19(2), pages 201-232, June.
    3. Arvind Ashta & Marek Hudon, 2009. "To whom should we be fair? Ethical issues in Balancing Stakeholder Interests from Banco Compartamos Case Study," Working Papers CEB 09-036.RS, ULB -- Universite Libre de Bruxelles.
    4. Arvind Ashta & Laurence Attuel-Mendès & Zaka Ratsimalahelo, 2015. "Another “French paradox”: explaining why interest rates to microenterprises did not increase with the change in French usury legislation," European Journal of Law and Economics, Springer, vol. 40(3), pages 479-509, December.

    More about this item

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K29 - Law and Economics - - Regulation and Business Law - - - Other
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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