Sources of interest cost savings realized through state bond banking: A case of market segmentation
Journal of Public Budgeting, Accounting & Financial Management
ISSN: 1096-3367
Article publication date: 1 March 2010
Abstract
A recent study found state bond bank participants continually realize considerable interest cost savings. Savings were calculated as differences in interest costs of bond bank loans and the bond offerings participants would have sold as alternatives to loans, (alternative market offerings). The present evaluation determines the sources of the savings. Savings are generated by not only differences in issue characteristics of bond bank issues and alternative market offerings, but also differential impacts of the same market forces and institutional factors on the interest costs of both types of sales. These findings verify that bond bank issues and alternative market offerings sell in different sub-markets, and confirm municipal bond market segmentation.
Citation
Solano, P.L. (2010), "Sources of interest cost savings realized through state bond banking: A case of market segmentation", Journal of Public Budgeting, Accounting & Financial Management, Vol. 22 No. 1, pp. 1-45. https://doi.org/10.1108/JPBAFM-22-01-2010-B001
Publisher
:Emerald Publishing Limited
Copyright © 2010 by PrAcademics Press