Hélène Ducourant, University of Lille I
The proposition I submit is rooted in a wider problematic. How have informal payment facilities between merchants and clients in France turned into a consumer credit’s market? How have credit practices based on trusting relationships (or dependency relationships) developed into for-profit firms using impersonal and rational criteria of client selection? And what are the effects of these credit innovations on household credit use?
In this talk, I will focus on a particular moment of the French consumer credit history: the very beginning of the wide development of revolving credit which occurred between in the late 1980s and the beginning of the 1990s. During this time, a new French consumer credit company launched- a large scale revolving credit with two innovations: The use of the credit is no longer restricted to a single chain of shops, but the money from the revolving credit can be used wherever people want, through money transfers from the revolving credit to personal account. This new revolving credit is a “home shopping” credit to unknown people. (There is no credit bureau in France, each company has to develop a system of clients’ selection based on information asked to the credit candidates about his/her personal situation to create its score.) Contrary to the practices of that time on the French market, it is no longer a credit to a household as “client of a chain of shops”, or as “previous clients of the credit company from hire-purchase operations”.
I will show how this new challenge contributed to the success of revolving credit. By the profitable uses of this credit the company managed to arouse, it is said to have “opened the eyes of the market” to the potential of revolving credit in France. I will develop two points: How this new challenger innovation can be explained through the functioning of the French consumer credit market. Indeed, a new challenger had no choice but to take risks in order to penetrate the market at the end of the 1980s. Thus, the risk was in proposing the credit to unknown people by home shopping, without attracting all the “lemons”. How this innovation creates new uses of the revolving credit in France. Indeed, the company attracted lower class people yearning to separate their credit transactions from their social relations, in order to escape the prejudice they often have to face and shame of borrowing money. Those people transferred more money from their revolving credit than previous clients of the previous revolving credits. They have massively used the revolving credit as a personal loan. That type of use creates more profits than the previous uses of credit revolving prevalent in France, such as paying the supermarket bills.
Nevertheless, this company didn’t expect to be so successful: it conducted business in this way due to lack of opportunities. Based on archives and interviews of executives of French consumer credit companies, the presentation shows how the “nomos” of the consumer credit market promote client’s new uses of a specific money, the one that comes from revolving credit.
Working paper
- Hélène DUCOURANT, « Le crédit revolving, un succès populaire », Documents de travail du CLERSÉ (Working Papers), n° 2, mars 2009.
About the author
Hélène Ducourant is a fourth-year-PhD student in sociology at the University of Lille I - France. Her research deals with the social construction of a market. More precisely, she explains how informal practices turn into a trade activity through the study case of consumer credit. She also teaches Sociology and Economic Sociology at the Sociological Institute of Lille I.