Is French corporate debt a concern?

The Bank of France (France’s High Council for Financial Stability) is concerned about the rise in France’s corporate debt ratio. It is true that the corporate debt ratio has risen since the 2008 crisis in France , while it has fallen in other OECD countries (except in the United States, where it is rising albeit from a low level). Is this concern warranted ? We do not believe so: Fr ench companies have been borrowing because they have maintained a high level of investment at a time of low profitability. In France and Italy, the skewing of income distribution in favour of wage earners has reduced corporate profitability. Italian companies have responded by reducing their investment; French companies by borrowing, which is preferable; The low level of interest rates on corporate debt means that return s on investment are much higher than the cost of debt, which makes debt favourable, especially as it has come in the form of long-term loans; LBOs (and leveraged loans), the trend in which may be a concern, represent only a small fraction (2%) of bank loans to French companies. In reality, the Bank of France is echoing the logic of the ECB , according to which monetary policy has only macroeconomic objectives (inflation, growth) and financial stability is ensured by macroprudential policies (bank ratios, etc.). The Bank of France wants to show that these macroprudential policies actually exist, that there is therefore no danger in keeping interest rates at zero, and for this reason it uses them, albeit in very small dos es .