International Exposure of French Banks: Balancing Opportunities and Risks

Olena Havrylchyk and Emilia Jurzyk

La Lettre du CEPII, 2007, issue 273

Abstract: As a number of European banks was touched by the American subprime crisis, there is a new urgency to consider the pros and cons of the ongoing globalization of the banking sector. In this letter, we aim to describe foreign exposures of French banks and compare them to the situation in other developed countries. Foreign subsidiaries and branches of French banks have brought them new sources of profits. However, these profits appear to be more modest when we consider higher risks of investing in countries with unfamiliar cultures, poor quality of institutions and uncertain business environment. In addition, the globalization of banking has diminished the benefits of diversification and has increased the risks of contagion.

Keywords: FRANCE; BANKING SYSTEM; CRISIS; CONTAGION (search for similar items in EconPapers)
JEL-codes: F42 G21 O52 (search for similar items in EconPapers)
Date: 2007-12
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepill:2007-273

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