Philippe Marguerat, Laurent Tissot and Yves Froidevaux (eds), Banques et entreprises industrielles en Europe de l'ouest, XIXe-XXe siècles : aspects nationaux et régionaux, Librairie Droz and Université de Neufchâtel, 2000, 270 pages, no index.

Compte-rendu par Pierre-Cyrille Hautcoeur, Université Paris I Panthéon-Sorbonne (Matisse) and Delta, à paraître dans Financial History Review.

Banques et entreprises industrielles en Europe de l'ouest (Banks and manufacturing firms in western Europe) is the result of a conference titled " le financement bancaire de l'entreprise " that was held in Neufchâtel in October 1997. It contains twelve papers and an introduction by the editors. The book is mostly concerned with the 1870-1945 period (with some brief incursions before 1870 and in the 1950s and 1960s), and focuses heavily on France and French banks and firms (which are central for six papers). Some western European countries are almost not mentioned such as the Iberian and Scandinavian countries, Ireland, Austria and the Netherlands.
Except for the introduction, which proposes some synthetic views, all papers are mostly national in focus. Actually, one of the qualities of the book is the presence of four synthetic papers on England (by Y. Cassis), Germany (Ph. Marguerat), Italy (G. Conti) and France (M. Lescure) that together form the first part. A second part presents bank-industry relationships from an industrial point of view, with papers on French public works (by D. Barjot), French hydroelectricity (by H. Morsel), and Swiss electricity (by S. Paquier). A paper by A. Broder on the evolution of French foreign direct investment after World War Two is also located there. The third and last part contains also four papers on examples of bank-industry relationships based on particular banks' archives : Société générale de Belgique (G. Kurgan van Hentenryk), Paribas (E. Bussière), Mirabaud (A. Plessis) and Banque cantonale Neuchâteloise (Y. Froidevaux).
The first part helps the reader to clarify his view on the recent debates on the relationships between bank and industry in the four biggest European economies. The main result is probably that the traditional opposition between English (specialised) and German (universal) banking systems must be reconsidered : universal banks exist in many countries, but with patterns varying among space and time ; other banks, mostly regional ones, also play the role traditionally attributed to universal banks (in France and Italy in particular, but also in Germany). A proof that the debate is not settled is the disagreement among the authors of the book : both Ph. Marguerat and Y. Cassis discuss the (then) recent stream of research that reassesses downward the role of the German universal banks, but when Y. Cassis is broadly favourable to that stream (and highlights the erroneous connection with the "British decline"), Ph Marguerat criticises it, demonstrating the essential role of the universal banks in the growth and finance of the most important manufacturing firms in the decades before World War One. This indirect debate proves that the ambition of the introduction, which proposed to end that Britain-Germany opposition and to substitute it with a France-Germany one is not yet underway.
The two following papers deepen the discussion : the one by M. Lescure actually demonstrates that France benefited from a wide variety of banks, with regional and investment banks quite able to finance manufacturing investment, but suggests that the main difference with Germany was that French banks didn't accept to follow the entrepreneurs in their long term ventures, and privileged their short term financial interests. In the Italian case, G. Conti suggest that the deficit didn't lie in the in the insufficient number or variety of banks, but in the late monetary and financial integration of the country. Both papers agree that World War One and the inter-war business fluctuations had an important impact on the financial systems, leading to the development of new solutions such as inter-firms credit and new intermediaries controlled by the State.
The second part results from one interesting characteristic of the conference, the fact that it brought together historians from banking history and from business history, so as to confront the two sides of the credit relationship. Unfortunately, the results from the discussion between the two groups do not really appear here. Business historians' papers focus on the financial needs resulting from business strategies, and how they were satisfied. They provide interesting syntheses on the relationships with banks and the finance of some essential industries of the second industrial revolution (electricity in particular). Nevertheless, the numerous firm-level examples that they provide do not allow to reach any clear conclusion even if some special functions of the banks are highlighted (for example, their help in opening foreign public works markets).
The third part is probably the one with most original information on the conference subject, providing detailed analyses of the industrial investment strategies of some banks. These insights remain nevertheless too isolated to modify the vision of any financial system, with the exception (for obvious reasons) of G. Kurkan-van Henteryck's paper, which emphasises both the role of the Société générale in the development of the heavy industries in the XIXth century and its responsibility in the withdrawal toward the Empire and the slow move toward new technologies after 1918.
As an economist, this reviewer would have liked questions raised by economists in the recent years to be discussed in more detail. For example, he would have welcomed an analysis of the precise solutions invented in order to solution asymmetric information and incentives problems in the bank - firm relationship (for a theoretical synthesis, see F. Allen and D. Gale, Comparing financial systems, Cambridge : MIT Press, 2000). A more macro-economic but essential question that is also scarcely dealt with in the book is the extent of the preoccupation and the solutions invented by the banks and by the regulatory authorities in order to prevent liquidity crisis resulting from over-transformation of short term resources in long term credit. Lastly, some elements of the financial systems remain understudied, particularly in Europe, so that the links between the banking and the other financial industries, almost untouched here, would justify a follow-up conference.
Although this is not specifically an economist's requirement, a more systematic international comparison, probably supposing a more systematic quantitative approach would also be welcomed. As the papers here show in many cases, qualitative approaches help clarifying the most important relationships between firms and banks, and then improving on a previous stream of research that tried to explain all banks and financial systems with an exclusive English (or, equivalently limited, German) lens. But this must not lead to exclude quantification, as M. Lescure's paper on France brilliantly shows in this extension of his study on the Crédit national data : on the contrary, it helps improving the categories used and making the quantification exercise more appropriate both to the periods and to the financial systems under study.
As a conclusion, this volume includes both high-quality national syntheses and well-informed industry or bank specific insights. It makes an interesting read.