Katrin Boeckh (OEI Regensburg and U Munich)Christa Hainz (Ifo, CESifo, and WDI) Ludger Woessmann (U Munich, Ifo, CESifo, and IZA) Do empires affect attitudes towards the state long after their demise? We hypothesize that the Habsburg Empire with its localized and well-respected administration increased citizens' trust in local public services. In several Eastern European countries, communities on both sides of the long-gone Habsburg border have been sharing common formal institutions for a century now. Identifying from individuals living within a restricted band around the former border, we find that historical Habsburg affiliation increases current trust and reduces corruption in courts and police. Falsification tests of spuriously moved borders, geographic and pre-existing differences, and interpersonal trust corroborate a genuine Habsburg effect.

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We investigate the impact of bank competition on the use of collateral in loan contracts. We develop a theoretical model incorporating information asymmetries in a spatial competition framework where banks choose between screening the borrower and asking for collateral. We show that presence of collateral is more likely when bank competition is low. We then test this prediction empirically on a sample of bank loans from 70 countries. We estimate logit models where the presence of collateral is regressed on bank competition, measured by the Lerner index. Our empirical tests corroborate the theoretical predictions that bank competition reduces the use of collateral. These findings survive several robustness checks. TiivistelmäTässä tutkimuksessa tarkastellaan pankkien välisen kilpailun vaikutuksia niiden myöntämien luottojen vakuuskäytäntöihin. Työn teoreettisen osan analyysi perustuu epäsymmetrisellä informaatiolla täydennettyyn spatiaalisen kilpailun malliin. Siinä pankit valintansa mukaan joko seulovat laina-asiakkaansa tai vaativat vakuuksia myöntämilleen lainoille. Mallin mukaan vakuuksien käyttö on todennä-köisempää, kun pankkien välinen kilpailu on vähäistä. Tätä mallin implikaatiota testataan työn empiirisessä osassa hyödyntämällä 70 maan aineistoa pankkien myöntämistä lainoista. Estimoivassa logit-mallissa pankkien vakuuksien käytön todennäköisyyttä selitetään pankkien välistä kilpailua mittaavalla ns. Lernerindeksillä. Estimointitulokset tukevat teoreettisen mallin keskeistä implikaatiota, että vakuuksien käyttö vähenee, kun pankkien välinen kilpailu kiristyy.Avainsanat: vakuudet, pankkien välinen kilpailu, epäsymmetrinen informaatio

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 2 Governments and central banks around the world have reacted to the financial and sovereign debt crisis by providing guarantees and injecting liquidity and capital into the financial system. The main motivation has been the fear of a systemic meltdown with substantial consequences for the economy as a whole. The related academic literature dates back at least to the question of credit rationing in Stiglitz and Weiss (1981) and the work on non-monetary transmission in Bernanke (1983) and Bernanke and Blinder (1992, 1998). This transmission has become of particular interest in the wake of the crisis when liquidity and solvency problems of banks led to a contraction in lending. Ivashina and Scharfstein (2010) and Puri, Rocholl, and Terms of use: Documents in EconStor maySteffen (2011) show that banks decrease credit supply to corporate and retail borrowers, which in turn leads to a decrease in investment, as shown by Duchin, Ozbas, and Sensoy (2010). Still, it is wide consensus that the interventions by governments and central banks -despite their negative externalities (e.g. a reduction of market discipline and lower funding costs as in Flannery, 2010) and substantial costs to taxpayers -have avoided much more detrimental consequences. In a first step, we analyze whether there is a change in lending behavior, using a comprehensive loan-level dataset of bank loans to corporate customers. In particular, we examine whether Landesbanken change their lending practices after July 2001 relative to all other banks. We concentrate on two measures to capture the lending practices by these banks.The first measure is the riskiness of a borrower as measured by the Z-Score (as adapted by MacKie-Mason, 1990). 3 The second measure is the interest rate charged to each borrower as measured by the All-In-Spread-Drawn (AISD). Using a difference-in-difference approach and controlling for a number of borrower and loan characteristics, we find that Landesbanken do not differ from other banks in their lending behavior before July 2001. The riskiness of borrowers and the interest rates they are charged are not significantly different. In contrast, after July 2001, the riskiness of borrowers at Landesbanken is significantly higher than that at other banks. At the same time, this higher riskiness is not accompanied by an increase in interest rates charged to these borrowers. Rather to the contrary, Landesbanken now charge significantly lower interest rates in comparison to other ba...

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Effect of Banking Regulation on Cross-Border Lending* Abstract Banking regulations often differ between countries. For instance, some regulators oblige banks to document their evaluation of firms' creditworthiness and thereby determine the banks' lending technology. We study in a theoretical model how differences in regulation influence competition between domestic and foreign banks and the effect of regulatory harmonization on cross-border lending. We predict that lending rates are lower and access to credit is easier for firms located in the border region if regulation differs. We confirm the model's predictions using unique bank-and firm-level data from Germany by employing a difference-in-difference estimation. Terms of use: Documents in EconStor mayJEL Classification: G21, G18, F23.

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