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The repercussions of the 2008 subprime crisis have modified the financing channels of French local governments and led to regulation changes. Using a unique panel comprised of the 96 French metropolitan departments covering a period of 13 years between 2005 and 2017, this paper investigates the determinants of departments’ borrowing using a spatial panel approach. Our estimates of a fixed-effects spatial Durbin model show that spatial determinants contribute to explaining departments’ financing decisions. The study demonstrates the existence of a spatial multiplier effect that may influence the systemic risk of bankruptcy for French departments. In this context, the recent profound reshaping of the local financing sector should be considered with care, paying attention to spatial interactions. JEL classification codes: R5l, H74, R53, C33