France: The issue of risk aversion

Series on the debates of the French presidential campaign – No. 10 French households’ high risk aversion is an issue that ought to be debated during France’s presidential election campaign. It can be seen in: The structure of households’ financial assets, given the very high weighting of risk-free assets; The high level of the household savings rate; The strong demand for social welfare. The consequences of French households’ high risk aversion are well known: Difficulty financing risky projects, leading to weak innovation and corporate modernisation; Need for financial intermediaries (banks, insurance companies) to absorb economic risk, leading to high capital ratios and high intermediation costs; High tax burden to finance social welfare. These three consequences end up curbing technological progress and growth. It is therefore important to discuss how to get French households to agree to take more risk and the possibility of the government taking risk instead of households. Series on the debates of the French presidential campaign ( a lready published): France: The issue of energy transition France: The issue of purchasing power Low skills are at the heart of France’s structural problems Reshoring and reindustrialisation in France: Is there hope? France: The issue of public finances France’s innovation and digitalisation shortfall France: The issue of inequality France: What happened in the early 2000s? How can France break its vicious circles?