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International Exposure of French Banks: Balancing Opportunities and Risks

Author

Listed:
  • Olena Havrylchyk
  • Emilia Jurzyk

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.

Suggested Citation

  • Olena Havrylchyk & Emilia Jurzyk, 2007. "International Exposure of French Banks: Balancing Opportunities and Risks," La Lettre du CEPII, CEPII research center, issue 273.
  • Handle: RePEc:cii:cepill:2007-273
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    File URL: http://www.cepii.fr/PDF_PUB/lettre/2007/let273ang.pdf
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    Keywords

    FRANCE; BANKING SYSTEM; CRISIS; CONTAGION;

    JEL classification:

    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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