Rue de la Banque no. 62: Dollar funding and French exports to the United States: lessons from the 2011 dollar crunch
This Rue de la Banque analyses the effects of a lesser availability of dollar funding on the export performance of French companies on the US market. It shows that the sudden drying up of cross-border dollar funding of French banks in the summer of 2011, triggered by the euro area sovereign debt crisis, led to a relative decline in exports of goods to the United States for at least a year. The effect of this shock is equivalent to that of raising tariffs by two to five percentage points.
This study highlights the importance of supply factors related to bank financing from the perspective of France’s export competitiveness.
By Antoine BERTHOU
Jean-Stéphane MÉSONNIER
Guillaume HORNY
The cost of foreign currency financing of exporting firms is a major factor in their competitiveness on non-euro area markets. However, this cost is particularly sensitive to the financing conditions on the currency market.
In order to quantify the role of foreign currency financing costs on competitiveness, we analyse the effects of a drying-up of dollar funding in the second half of 2011 on the export performance of French firms on the US market.
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- Published on 05/17/2018
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Updated on: 05/23/2018 14:00