Culture, Geography and Institutions. Empirical Evidence from Small-scale Banking

Franz Hahn

No 417, WIFO Working Papers from WIFO

Abstract: The fast adoption of Western-style democracy and market economy principles as established by EU standards by many of the Eastern European "transformation countries" since the early 1990s should have raised cross-border lending by banks based in "old" EU member countries to clients resident in new Eastern European EU member countries. This should particularly apply to Austria since it shares a long-lasting common history and, hence, common culture with these countries. To account for common culture we propose a new gauge aimed at measuring "cultural proximity" by making out onomastic similarities between common surnames of Austrian residents and common surnames of residents in the Czech Republic, Slovak Republic, in Hungary and Slovenia, respectively. By exploring, with panel econometric techniques, cross-border lending activities of Austria's small-sized to medium-sized regional banks, located close to its eastern border, over the period from 1996 to 2008 this paper provides evidence that is supportive of the presumption that cultural closeness matters for making basic laws of economics work.

Keywords: common culture; cross-border bank lending; geography; institutions; panel econometric analysis (search for similar items in EconPapers)
Pages: 25 pages
Date: 2012-01
New Economics Papers: this item is included in nep-ban, nep-eur, nep-geo and nep-tra
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Journal Article: Culture, Geography and Institutions: Empirical Evidence from Small‐scale Banking (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2012:i:417

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