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In the EU, the specialty municipal banks have been the traditional funding source besides tax sharing and governmental transfers for Local Governments (LGs). With the decentralization process, LGs experienced different market-based options so that banks were no longer the only source of funding. However, with the onset of the Eurozone crisis, publi...
Contexts in source publication
Context 1
... applicable interest rates for bank loans are periodically determined by the Minister of the Treasury, indicating the maximum rates for loans to LGs. The spreads between them are shown in Figure 1. In Figure 1, each blue dot represents a municipal bond issued. ...
Context 2
... spreads between them are shown in Figure 1. In Figure 1, each blue dot represents a municipal bond issued. Their visualization is in chronological order from 1996 until the end of 2011. ...
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Citations
... The literature (Ter-Minassian and Craig, 1997;Bailey et al., 2009;2012;Cepiku and Mussari, 2010;Eltrudis and Monfardini, 2020) has identified four models for the governance of municipal borrowing to consider the contextual differences and differences in control approaches: the market discipline, the local political discipline, the centralised discipline, and the professional discipline. The centralised discipline and control model postulates the need for bureaucratic controls and relies on detailed rules that LGs must meet for them to borrow. ...
... As a result, the European municipal bond market is smaller than the sovereign bond market (Medda and Cocconcelli, 2018). Moreover, it is particularly underdeveloped in unitary countries because adopting the centralised discipline and control model generates higher and hidden costs for the LGs that borrow from the financial markets (Eltrudis and Monfardini, 2020). Municipal bonds' spreading as an alternative to bank lending was hampered by the start of the European Union's Stability and Growth Pact, especially in unitary countries that preferred the bank lending channel over bonds as a source of debt funding (Peterson, 2003). ...
... The most striking example is the role of the principle of financial autonomy, its effective implementation, and its extent on the local accounts (Cepiku and Mussari, 2010). If the need for close monitoring outweighs the appeal of autonomy such a legal framework generates hidden costs for the LGs which borrow from the financial markets (Eltrudis and Monfardini, 2020). With central government policies intended to 'contain expenditures rather than to improve efficiency and effectiveness' (Anessi-Pessina and Steccolini, 2005), it will not be possible to make widespread use of municipal bonds in European unitary countries. ...
Purpose: There is broad consensus across different studies in considering decentralisation
as a critical factor for increasing the responsiveness of Local Governments (LGs). For this
decentralisation process to be operational, financial autonomy is essential. Since LGs may
access financial markets to secure their self-sufficiency, this study focuses on the financial
autonomy of LGs based on municipal bonds. However, the centralised control of borrowing
is supposed to decrease financial autonomy, especially in unitary countries. Focusing on the
time when the municipal bonds were wide spreading in Italy, that is unitary indeed, the paper
investigates the capacity of municipal bonds to increase the financial autonomy of local
governments. Reference is also made to the European fiscal rules, that were getting stricter
in the same years, because these constitute an excellent example of this control model.
Approach/Methodology/Design: Addressing this goal, this paper relies upon Generalized
Least Squares (GLS) regression of longitudinal (panel) data.
Findings: Findings show that financial autonomy strictly depends on tax-raising powers, but
municipal bonds may help. There is indeed statistical evidence of the relationship between
financial autonomy and bond issuing, reinstating the idea that municipal bonds could qualify
as an instrument of financial autonomy for LGs.
Practical Implications: However, to benefit from this positive relationship between
municipal bonds and financial autonomy, the constraints of the centralised model need to be
reduced or the model of control to be changed.
Originality/Value: The issue is not just whether the use of municipal bonds granted financial
autonomy to local governments, but rather that their usage may generate growth and
maintenance of financial autonomy within the centralised discipline and control model.
... The Central government was still in the control of British government. The provinces were circumscribed through the extra-ordinary powers of Governor General, imposing through Governor or his power of assenting or with holding assent from provincial legislature (Ahmed, 2013;Eltrudis & Monfardini, 2020;Gray & Barford, 2018;Laegreid, n.d.;Wight & Perham, 1947). Jinnah rejected the Act on the ground that federal scheme which is proposed in the Act is devoid of all basis elements and fundamental requirement of federation. ...
This article would attempt explore the roots of federation of Pakistani with respect to analyzing its political and Constitutional history from the British India. Because the idea of federation in this region has its roots in that period. The ideas of federalism emerged from the British introduced constitutional schemes. In response to that schemes, Congress and Muslim League had its own demands and which manifest their particular orientation for federalism. The theme of this article is to explore the differences of Congress and Muslim League on the federal arrangement in British India and on the future union of India. In this regard position of Muslim League is especially put in to consideration that what the party has its ideology regarding the federal form of government. For understanding the nature of Muslim league’s ideology regarding federalism, the politics and policies of Muslim League are studied in this article. This article poses challenge to the claims which are taken as granted that the League was a champion in demanding the maximum provincial autonomy in British India. The article would also highlight role of Leagues’ politics in Muslim Majority provinces to understand its nature of politics for federal arrangement in India. The important question that why Pakistan did not been a viable federation is sought out in the nature of Muslim Leagues politics in British India. A content analysis method is adopted which is qualitative study to find the historical context of evolution of federalism in Pakistan.
... The adjustment of bank risk-taking in response to economic fluctuations is an operational requirement, and the influence of the government on banks is also common in the world [41], but there are few studies combining the three factors. More importantly, different from the existing research background, the CCB and the city investment company (CIC) are enterprises with Chinese characteristics and are experiencing the reform wave of economic and financial system. ...
Countercyclical fiscal regulation can mitigate economic risk, but this is bound to increase the scale of local government debt during an economic downturn, and then spread risk to the banking sector, forming potential financial instability factors. We extracted the three most important variables in this process: economic fluctuation, local debt risk and bank risk-taking to build an econometric model and found that: (1) both economic fluctuations and local government bond risks have a significant impact on bank risk-taking, which is negatively correlated with local economic growth, while the increase of local government bond risks tends to increase bank risk-taking in the long run; (2) the impact of local government debt risk significantly increases the loans of city commercial banks flowing into the construction industry. Therefore, the impact of local government bond risk on city commercial banks is concentrated in the impact on their construction loans. This study has an important reference value for timely and moderate countercyclical regulation, preventing local debt risk from spreading to banks, constructing a sustainable local government−bank ecology, and promoting sustainable economic development.
This study attempts to explain the relationship between government debt and household wealth inequality, and further discusses possible channels of influence to provide ideas for mitigating the increasing gap between rich and poor. This study puts forward relevant assumptions in the theoretical model, further analyses the composition of household wealth, and verifies that household housing investment is an essential factor. This study finds that the expansion of government debt raises the price of housing, leading to faster wealth growth for wealthy households with relatively more real estate and widening the gap between rich and poor. This study argues that in economic development, government debt should be tilted towards livelihood protection and infrastructure construction, providing guaranteed housing to eligible relatively poor and narrowing the gap between rich and poor to a reasonable extent.
