Transborder lending policies: The example of Germany and Austria

Data on the Ifo credit climate, which was compiled twice annually from a special question in the Ifo Business Survey, show that German SMEs near the Austrian border have a better access to credit than other firms. Without cross border lending, the proximity to the border would be a disadvantage in terms of borrowing. Cross-border lending compensates for this disadvantage. The fact that the firms profit from proximity to the border suggest that Austrian banks have a competitive advantage.