ABSTRACT
Liberalization and modernization of the financial system in France have resulted in farreaching modifications in the banking environment in the past decade. Economic and financial fluctuations have increased, modifying and increasing the risks banks have been required to face. While these facts have been widely commented on, work on the macroeconomic modelling of banking has failed to account satisfactorily for the evolution of banking practices. This failure may result from two misconceptions. The first is evidently that of the model-builders themselves, who may be encountering problems when attempting to formalize what seems obvious to practitioners. The second, however, is a misconception of the aforesaid practitioners who, lacking detachment, may be exaggerating the significance of the changes in recent years, to the extent of forgetting the macroeconomic foundation of their daily activity. Whilst our intention is not to settle this debate, we believe it might be useful to give an account of the work we have recently carried out on modelling the behaviour of French financial intermediaries. We try to specify the extent to which the modelling process has been developed, without forsaking the macroeconomic framework. We would like to refer in particular to the limited feasibility of describing the manner in which banks manage risks.
