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The Influence of Jurisdiction Size and Sale Type on Municipal Bond Interest Rates: An Empirical Analysis
Author(s) -
Simonsen Bill,
Robbins Mark D.,
Helgerson Lee
Publication year - 2001
Publication title -
public administration review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.721
H-Index - 139
eISSN - 1540-6210
pISSN - 0033-3352
DOI - 10.1111/0033-3352.00141
Subject(s) - municipal bond , interest rate , jurisdiction , bond , business , proxy (statistics) , population , public interest , bond market , finance , economics , law , demography , machine learning , sociology , political science , computer science
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.