Municipal Bond - Definition
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Academic Research on Municipal bond
State fiscal institutions and the USmunicipal bondmarket, Poterba, J. M., & Rueben, K. (1999). InFiscal institutions and fiscal performance(pp. 181-208). University of Chicago Press. This paper presents new evidence on the effect of state fiscal institutions, particularly balanced-budget rules and restrictions on state debt issuance, on the yields on state general obligation bonds. The authors analyze information from the Chubb Relative Value Survey, which contains relative tax-exempt yields on the bonds issued by different states over the period 1973-1996. The information content ofmunicipal bondrating changes: A note, Ingram, R. W., Brooks, L. D., & COPELAND*, R. M. (1983).The Journal of Finance,38(3), 997-1003. This study examines the information content of municipal bond rating changes by evaluating municipal bond price adjustments during the period surrounding a rating change. It further examines the institutional settings of the municipal bond market in order to specify why information content of bond rating changes might be anticipated. Secondary trading costs in themunicipal bondmarket, Harris, L. E., & Piwowar, M. S. (2006). The Journal of Finance,61(3), 1361-1397. This paper aims to show that municipal bond transaction costs decrease with trade size and do not depend significantly on trade frequency. Also, municipal bond trades are substantially more expensive than similarsized equity trades. THis is achieved by using samples of over 167,000 bonds in 1-year of all US municipal bond trades. Liquidity in US fixed income markets: A comparison of the bid-ask spread in corporate, government andmunicipal bondmarkets, Chakravarty, S., & Sarkar, A. (1999). This study examines the determinants of the realized bid-ask spread in the U.S. corporate, municipal and government bond markets for the years 1995 to 1997, based on newly available transactions data. The authors find that liquidity is an important determinant of the realized bid-ask spread in all three markets. Distance still matters: Evidence frommunicipal bondunderwriting, Butler, A. W. (2008). The Review of Financial Studies,21(2), 763-784. Using a sample of municipal bond offerings, the author finds that local investment banks have substantial comparative and absolute advantages over non-local counterparts-locals charge lower fees and sell bonds at lower yields. These findings suggest that high-risk bonds and non-rated bonds are more difficult to evaluate and market, and that investment banks with a local presence are better able to assess soft information and place difficult bond issues. State fiscal institutions and the USmunicipal bondmarket, Poterba, J. M., & Rueben, K. S. (1997). National Bureau of Economic Research. This paper presents new evidence on the effect of state fiscal institutions, particularly balanced-budget rules and restrictions on state debt issuance, on the yields on state general obligation bonds. It analyzes information from the Chubb Relative Value Survey, which contains relative tax-exempt yields on the bonds issued by different states over the period 1973-1996. Credit risk, credit ratings, andmunicipal bondyields: a panel study, Capeci, J. (1991). National Tax Journal, 41-56. This paper uses a panel data set of general obligation bond issues to examine the channels through which a municipality's credit quality affects its borrowing rate. The paper considers both the direct effect of changes in credit quality on changes in borrowing rates and the indirect effect that operates through changes in credit ratings. Trading activity and price volatility in themunicipal bondmarket, Downing, C., & Zhang, F. (2004). The Journal of Finance,59(2), 899-931. Utilizing a comprehensive database of transactions in municipal bonds, the authors investigate the volume-volatility relationship in the muni market. Findings highlight a positive relationship between the number of transactions and a bond's price volatility. It also shows a negative relationship between average deal size and price volatility. These results are found to be robust throughout the sample. The influence of jurisdiction size and sale type onmunicipal bondinterest rates: An empirical analysis, Simonsen, B., Robbins, M. D., & Helgerson, L. (2001). Public Administration Review,61(6), 709-717. The authors use data on municipal bond sales in Oregon from 1994 to 1997 to explore whether population (as a proxy for financial-management capacity) and sale type (competitive or negotiated sale) influence interest rates. They find that smaller jurisdictions pay an interest cost penalty in the municipal bond market, and that competitive sales result in significantly lower interest rates compared to negotiated sales. The authors suggest that measures to enhance the financial-management capacity of small governments are warranted and that state laws requiring justification for negotiated sales are appropriate. Municipal bondratings: a discriminant analysis approach, Michel, A. J. (1977). Journal of Financial and Quantitative Analysis,12(4), 587-598. The financial dilemmas faced by large municipalities, due in general to decreasing tax bases, increasing public services, inflationary pressure and in some cases fiscal irresponsibility, have brought increased attention to the subject of municipal bond ratings. Such ratios are frequently used to describe characteristics of the risk of municipal obligations. This paper attempts to determine if these ratios can be effectively used to predict ratings. Determinants ofmunicipal bondyields, Hastie, K. L. (1972).Journal of Financial and Quantitative Analysis,7(3), 1729-1748. Acceleratingmunicipal bondmarket development in emerging economies: an assessment of strategies and progress, Leigland, J. (1997). Public Budgeting & Finance,17(2), 57-79. This paper examines the use of municipal bonds in financing urban infrastructure in emerging countries, especially the ones that are trying to increase the development of their municipal bond markets. It analyses the use of the US municipal market by most of these countries, and reviews the efforts by policymakers to increase market characteristics in four emerging economies: Indonesia, the Philippines, Poland, and South Africa.