While American banks were rushing headlong into providing consumer credit, their counterparts in France bided their time. Crédit Lyonnais was the first bank to offer personal loans in France, beginning in 1959, thirty-five years after the first full-fledged personal loan department was created by a U.S. bank. In three successive waves – 1962, 1972, and then beginning in the mid-1980s – France's major banks tested the water of consumer lending. On each occasion, they tried to compete with dedicated consumer finance companies by offering lower rates. On each occasion, they faced unexpectedly high costs associated with both nonpayments and administrative procedures, and were forced to pull back from the practice. What mattered most for the role of French banks in the evolution of consumer credit was something that did not happen: the failure of French banks to move earlier into personal and sales lending. Explaining such historical nonevents can be especially challenging for social scientists. This chapter relies on an explicit comparison with the experience of commercial banks in the United States to parse out causes.

One obstacle was the reputational cost of small lending. Unlike in the United States, the French small-loan sector was never fully rehabilitated in a way that made it feasible for commercial banks to enter the sector. Part of the problem was the link between credit and welfare. Early French welfare advocates envisioned a role for credit as a form of self help, just as they did in the United States. Indeed, self-help credit had deep roots in France, in the form of charitable pawn. France's monts-de-piété, a system of charitable pawn shops with origins in the middle ages, enjoyed a state-mandated monopoly on pawn lending. But the business model and governance of charitable credit in France took a different tack than in the United States that failed to provide a broader mantle of legitimacy for bank-led consumer lending. Ironically, the principle of charitable credit came to be so fully accepted in France that it was embraced by the French state, which in the wake of World War II absorbed the functions of charitable pawn into France's emerging welfare state apparatus. Unlike charitable pawn in the United States, which became the springboard for a broad private-sector effort to provide self-help through credit on fair terms, the French version never led to a popular linking of private credit with welfare.