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

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  • Franz R. Hahn

    (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.

Suggested Citation

  • Franz R. Hahn, 2012. "Culture, Geography and Institutions. Empirical Evidence from Small-scale Banking," WIFO Working Papers 417, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2012:i:417
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    References listed on IDEAS

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    Cited by:

    1. Beetsma, Roel & Burgoon, Brian & Nicoli, Francesco, 2023. "Is european attachment sufficiently strong to support an EU fiscal capacity: Evidence from a conjoint experiment," European Journal of Political Economy, Elsevier, vol. 78(C).
    2. Cheung, Man-Wah & Wu, Jiabin, 2018. "On the probabilistic transmission of continuous cultural traits," Journal of Economic Theory, Elsevier, vol. 174(C), pages 300-323.
    3. Franz R. Hahn, 2015. "The Empirics of Balance Sheet Mechanics. Capital and Leverage in Small-scale Banking," WIFO Working Papers 498, WIFO.
    4. Annie Tubadji & Toby Denney & Don J. Webber, 2021. "Cultural relativity in consumers' rates of adoption of artificial intelligence," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1234-1251, July.
    5. Cheung, Man-Wah & WU, JIABIN, 2016. "On The Transmission of Continuous Cultural Traits," MPRA Paper 69934, University Library of Munich, Germany.
    6. Owen, Ann L. & Temesvary, Judit, 2014. "What determines cross-border bank lending and risk-taking? The effects of culture, geography, institutions, and information exchange," MPRA Paper 57692, University Library of Munich, Germany.
    7. Wang, Jie & Long, Zhineng & Chen, Liang & Li, Wanli, 2024. "How does linguistic diversity matter? The case of trade credit," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 333-350.

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    Keywords

    common culture; cross-border bank lending; geography; institutions; panel econometric analysis;
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