The 'Little Big Bang' in Paris: financial market deregulation in a dirigiste system

Abstract. French dirigisme since World War II has been identified at four levels: economic planning; the dominance of a neo-colbertisre civil service elite; Gaullism and the Fifth Republic; and a state-led, credit-based system for financing industry. The last of these was seen by Zysman (1977, 1983) as the strategic core of dirigisme , as in Japan, through state control of industrial purse strings. Paradoxically, it was the Socialist Governments of 1981–86, in response to deregulation elsewhere, which initiated extensive capital market reforms intended to replace the state-led, credit-based system with an 'arms-length' financial market system. These continued under the right-wing Chirac Government. However, the reform process itself has been state-led rather than market-led; and both rigidities in the markets and shortcomings in the reforms have been highlighted by the October 1987 crash. Much dirigisme of a tactical kind remains, but the state's potential for strategic intervention has been reduced.     

Determinants of Municipal Bond Ratings for General‐Purpose Governments: An Empirical Analysis

In the wake of the destabilization of the tax‐exempt bond insurance industry, this paper presents an ordered probit model of the determinants of the credit ratings of 965 county and city governments from throughout the nation. The underlying Moody's rating of these governments is posited as a function of a vector of publicly available economic, demographic, governmental, fiscal, and financial variables. The empirical results demonstrate the relative importance of economic base diversity, the growth rates of earnings, and population as well as existing full faith and credit debt on credit ratings. Additionally, our findings support the proposition that the existence of tax limits reduce the perception of credit quality, while expenditure limits raise credit ratings.