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:panel econometric analysis, cross-border bank lending, geography, common culture, institutions
Forschungsbereich:Makroökonomie und europäische Wirtschaftspolitik
Stylised facts suggest that there is some "spatial structure" in the dynamics of cross-border lending of Austrian regional
banks that seems to be closely related to the eastward enlargement of the European Union. This short paper provides evidence
that a stark space-related dependency of competition has been at work governing the cross-border lending behaviour of the
Austrian regional banks since 1995.