The effect of national attitudes to public
intervention in mortgage lending and eviction
in French and English law
School of Law, University of Shefﬁeld, Shefﬁeld, UK
Purpose – The purpose of this paper is to show the different attitudes to bank ownership and
regulation, residential lending and eviction in the UK and France, with their effects in the credit crunch
and how these factors are connected. UK non-interventionism stems from a history of private banking,
where competition produced plentiful ﬁnance but high risks for borrowers, where eviction is certain
and fairly quick, but not necessarily disastrous for borrowers within a ﬂexible system. The French
history of post-war interventionism for reconstruction and cautious banking has had successes and
failures, culminating in large-scale special loans to lower-income borrowers, improving lending
liquidity and stability. The French lower lending levels, intervention and caution can be partly
explained by the disastrous effects of French debt and eviction processes on borrowers, but with
overlay of delay and social protection.
Design/methodology/approach – The paper uses a historical institutionalist approach, calling on
historical materials, statistics (where available) and the law and procedure of banking, mortgages,
eviction and insolvency. Quantitative comparison of mortgage evictions is difﬁcult, but procedures
Findings – National approaches to banking are path dependent and this effect is underestimated,
particularly concerning attitudes to public intervention and eviction. Awareness of these connected
effects could improve comparative research to assist lending to lower income groups, particularly
concerning special French loans.
Practical implications – This can improve open-mindedness, and promote ideas to house young
people rather than simply calling for heavy regulation in the UK, or criticising French interventionism.
Originality/value – Comparative evictions related to the history of banking intervention are
considerably understudied. The paper addresses the issues.
Keywords Banking, Mortgage default, Regulation, Insolvency, Housing
Paper type General review
Last year’s global credit crunch happened following large-scale lending to sub-prime
borrowers in the USA and widespread securitization, with global diffusion of risk.
Many banks refused to lend or now lend only to people who are a better credit risk.
Simultaneously, the recession led to less well-off or insecure borrowers facing the
prospect of losing their home. Sub-prime borrowers are not a good credit risk, often
because they are in some way ﬁnancially fragile.
A fundamental problem with such “prudential” lending, is that people on a low
income, particularly young people, will face much greater difﬁculty in borrowing and
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The author would like to thank Bernard Vorms for his contribution in information and
International Journal of Law in the
Vol. 2 No. 2, 2010
q Emerald Group Publishing Limited