Financial System and Real Estate Crises: The Case of France at the End of the 19th Century

The paper studies the role of the financial system in the greatest real estate crisis experienced by the French economy until the recent crises of the 1990s and 2007-2013. It first emphasizes the role of the financial factors (financial innovations and low interest rates) in the boom of the years 1876-1882. Second it shows that the bust of 1882 and the ensuing crisis did not induce a collapse of the banking system similar to that of the recent years because of the growing role of the Crédit de France (CFF) and the development of the financial market. However, it finally demonstrates, that the further management of the crisis by the CFF, coupled with the withdrawal of commercial banks, is partly responsible for the long stagnation of the real estate market until the late 1900s and the failure of financing popular housing.