'Investment credit' and the French Golden age of growth, 1954-1974

The role of banking and nance in the Golden Age of European growth (1950-1973) is very little known and widely underestimated. This paper studies the French system of economic planning and investment-based strategy that enhanced medium and long term nancing (called 'investment credit'). I use a newly constructed database that matches the amount of credit (that had to be registered at the Banque of France ) in 49 sectors to corporate tax sectoral statistics. It shows a signi cant positive relationship between 'investment credit' and the marginal product of capital. The allocation of medium/long term credit was thus e cient and favored the allocation of productive capital across sectors. I then investigate the impact of credit on investment and turnover growth using GMM estimations in order to avoid the endogeneity bias. The e ect is signi cant and positive for 'investment credit', contrary to short term credit which did not play any role for investment. The new institutions that emerged after WWII were designed to solve a coordination problem that is to nance long term investment although it was not privately bene cial because too risky for banks. Understanding the mechanisms and success of credit policy in the French mixed economy during the 50s and 60s also helps to understand its failures during