The "privatization" of municipal debt

Arbeitspapier

Using confidential loan-level data, we investigate the importance of bank loans in the debt structure of U.S. state and local governments. We show that most bank debt is closely substitutable with municipal bonds and that smaller, lower-income and less credit-worthy borrowers are more reliant on bank borrowing. Moreover, we document a sizable difference in the maturity structure of bonds and loans that allows municipalities to save on interest costs but that could also lead to diluting bondholders' claims. Such dilution concerns are amplified by governments substantially increasing bank borrowing in response to credit quality deterioration. This suggests the upward trend in bank borrowing will likely persist if fiscal positions continue to decline.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: ECONtribute Discussion Paper ; No. 062

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Trade and Environment ; Accounting
• Thema: state and local governments' debt ; debt heterogeneity ; fiscal shocks

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Ivanov, Ivan T. ; Zimmermann, Tom
• Ereignis: Veröffentlichung
• (wer): University of Bonn and University of Cologne, Reinhard Selten Institute (RSI)
• (wo): Bonn and Cologne
• (wann): 2021

Weitere Informationen

• Handle: http://hdl.handle.net/10419/231487
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ