Local liquidity constraints: What place for central bank regional policy? The French experience during the Belle Époque (1880-1913)

- We assess the role of the Bank of France local policy.
- We build a new data set to proxy credit development.
- Bank of France branches supported local credit market.
- The positive effects of the Bank of France local policy outweigh the negative ones.

This paper examines whether improved geographical access to the central bank contributed to local credit development in France during the Belle Époque (1880-1913). I use a new data set of credit by administrative area (département) in order to test the effect of the Bank of France network of branches on an indicator of local “credit development”. The results suggest that, despite potential market frictions created by the Bank of France, the positive effects of the network of its branches outweighed the negative ones.