France and the International Financial Crisis: The Legacy of State-Led Finance

Despite the far-reaching liberalization of the French banking system over
the past quarter century, French banks suffered far less in the international
financial crisis (2007–2009) than banks in the United Kingdom and
Germany. However, the French system also suffered far more—at least in
the first stages of the crisis—than the banking systems of Southern Europe.
By several measures, French banks were world leaders in financial innovation,
and the French banking system was highly exposed to international
market movements. The limited impact of the crisis, however, owed to the
specificities of French “market-based banking.” Deliberate state action over
the two decades prior to the crisis created a specific kind of banking system
and encouraged forms of financial innovation, the unintentional consequence
of which was the limited exposure to the securitization that caused
the damage wrought during the financial crisis.