Why are French companies borrowing when companies in other euro-zone countries are deleveraging?

Since 2009, France’s corporate debt ratio in relati on to GDP has risen by 1.5 percentage points, whereas that of companies in the other euro-zone countries (the euro zone excluding France) has remained stable. Concern is sometimes expressed at the rise in France’s corporate debt ratio. What accounts for this difference between the borrowing behaviour of French and non-French European companies, when both are faced with very low interest rates? We try to identify the cause of this divergence by looking at: Corporate profitability; The investment effort and self-financing capacity; Shareholder remuneration; Acquisitions; Cash holdings. We find that the rise in French corporate debt, at a time when companies have been deleveraging in the rest of the euro zone, stems from: Investment financing, due to lower profitability in France; Faster growth in acquisitions and in cash holdings in France. So is the rise in France’s corporate debt ratio a concern? The first explanation (investment financing) is positive; the second (acquisitions and cash holdings) is negative.