Premium
RISK, SEGMENTATION, AND THE MUNICIPAL TERM STRUCTURE
Author(s) -
Trzcinka Charles
Publication year - 1986
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1986.tb01140.x
Subject(s) - term (time) , econometrics , economics , actuarial science , business , quantum mechanics , physics
This paper examines the impact of institutional demand on the tax‐exempt term structure while controlling for biases induced by using ratings as measures of risk. Using a more extensive database than any used in previous studies, the author controls for risk by employing a random coefficient model and by introducing several new variables. Results of the study indicate that the risk hypothesis provides a significantly better explanation of the rising term structure than does the institutional demand hypothesis.