Why French banks survived the crisis
Despite the far-reaching liberalization of the French banking system over the last quarter-century, French banks suffered far less in the financial crisis than banks in the United Kingdom and Germany. In the current issue of Governance, David Howarth asks why. French policymakers were not diehard enthusiasts of liberalization, and continued to emphasize interventions that produced a highly consolidated and closed banking system. An “unintended consequence of state action,” Howarth argues, “was that French banks downplayed securitization and the purchase of securitized prodctus, thus limiting the impact of a crisis connected in large part to financial innovation.” Read the article.