Metamorphoses: the relationship between banking and economic modernisation in post-World War II France

After World War II, France’s economic growth was the strongest in its history and the country broke out from the trap of middle-income countries. The “thirty glorious years” was accompanied by the modernization of the economy, in which a strong state control banking system, called the goal-oriented banking system, played a significant role. Through the transformation of the French banking system after World War II, we prove that in the case of a middle-income country, the deepening of the financial intermediary system promotes the modernization of the economy. On the other hand, after a while the too strong state regulation on the banking system will become a limitation because the financial system cannot fulfill its task of economic modernization, as state intervention will limit the deepening of financial intermediation and thus the further modernization of the economy. Finally, we will also examine whether the actors of the financed industries become “lazier” due to the active state intervention in the lending policy, which brings with it the issue of moral hazard.