Research Outline

French Banking Industry


To determine the major regulatory constraints or factors affecting the French banking system and any significant changes in the last two-five years, in order to evaluate the working of a small business bank in France.

Early Findings

Through our preliminary research, we have determined an overview on the major constraints faced by the french banking system and also regarding the current changes in the industry.

Constraints On French Banking Sector

  • Low growth rate, low interest rate environment and regulatory constraints are putting pressure on the french banking sector's margins, estimated at around 6.5% in 2016.
  • France is one of the most challenging countries for processing payroll taxes due to rigid regulations. Employment in the banking sector is directly affected by the payroll taxes which are extremely heavy in case of France.
  • International Monetary Fund has warned about the rising debt levels due to low interest rates, creating financial vulnerabilities that can upset the stability in the french banking system.

Relaxation Of French Banking Monopoly

Tough Bank Capital Requirements

  • French banking regulators are applying capital buffer which will oblige french banks as well as foreign banks operating in France to hold capital amounting to 0.25% of risk-weighted French assets.
  • This creates additional capital while economy is going strong and was implemented as a resistance for any international financial crisis.