Banking and insurance

France possesses one of the largest banking sectors in western Europe, and its three major institutions, Crédit Agricole, BNP Paribas, and Société Générale, rank among the top banks on the continent. Traditionally, banking activities were tightly controlled by the government through the Banque de France. However, deregulation beginning in the 1960s led to a substantial increase in branch banking and bank account holders, and legislation in 1984 further reduced controls over banks’ activities, which thereby enabled them to offer a wider range of services and led to greater competition. Since then, encouraged by the lifting of restrictions on the free movement of capital within the EU in 1990, banks have broadly internationalized their activities. In 1993 the Banque de France was granted independent status, which freed it from state control. In general, employment in the banking sector has declined, largely because of the widespread computerization of transactions and this restructuring. At the turn of the 21st century, the franc gave way to the euro as the legal currency in France.

France has a large insurance industry dominated by major companies such as Axa, CNP, and AGF but also including a number of important mutual benefit societies, which administer pension plans. The deregulation of this sector has led to vast reorganization, with activity still concentrated in Paris though a number of provincial towns have developed as specialist centres through the location of various mutual societies.

The stock exchange

Share transactions in France were historically centred on the Bourse de Paris (Paris Stock Exchange), a national system that in the late 20th century incorporated much smaller exchanges at Lyon, Bordeaux, Lille, Marseille, Nancy, and Nantes. Share dealings and stock market activity increased greatly beginning in the early 1980s, corresponding with a period of deregulation and modernization: official brokers lost their monopoly on conducting share transactions; a second market opened in 1983 to encourage the quotation of medium-size firms; and in 1996 the “new market” was launched to help finance young, dynamic companies in search of venture capital. Also in 1996 the Bourse was restructured, reinforcing the powers of its controlling body, Commission des Opérations de Bourse. In 2000 the Bourse merged with the Amsterdam and Brussels stock exchanges to form the Euronext equities market, which in 2006 merged with the New York Stock Exchange.

Foreign investment

Financial deregulation, the movement toward a single European market, and the general freeing of world trade are among the influences that have encouraged investment by French firms outside France and increased the reverse flow of foreign investment funds into the country. In the industrial field French companies have shown a growing interest in investing in other advanced economies, especially the United States. Over recent years investments have also multiplied in the developing economies of Asia and eastern Europe. Foreign firms investing in France have been principally from the EU (notably the United Kingdom, the Netherlands, and Germany) and the United States. Most investment is related to the fields of engineering, electronics, and chemicals and generally is directed at the more highly urbanized centres of the country. The sources and nature of foreign investment in France are becoming more diverse, however. Japanese interests have increased substantially, for instance, and investment in property and the service industry has been growing, particularly in and around Paris.