Municipal bonds as a tool for financing capital investment in local government units in Palestine

Abstract

Municipal bonds are an option available to many cities to raise long-term financing to finance the infrastructure projects. This study aims to develop and find local measures of creditworthiness that are suitable and applicable for local government units in Palestine. Different variables are recognized to see the effect on the issuance of municipal bonds, macroeconomic variables measured by revenues and expenditures per capita, cost of capital, and unemployment rate. Municipal status variables have subgroup variables of municipality size, financial reporting quality, outstanding debt, and financial distress. Various financial ratios, comparative and cross-sectional analysis, horizontal and vertical analysis were used. These ratios and analysis have been used to determine the municipal status variable. The results of the study were limited to the largest 11 sample municipalities; each is the central local government unit at the governorates and was not generalized for all municipalities in Palestine. The study found that macroeconomic and municipality status affects the issuance of municipal revenue bonds. Based on the study results, municipal bonds are highly recommended. Also, instructions from the Ministry of Local Government need to be established and to enforce municipalities about the declaration date of publishing audited financial statements.

Using the Power-Interruptions-Finances-Resources model to tackle the financial management problems of municipal corporations in India

“…Several studies have broadly reinforced the role of better tax collections (Kitchen and Slack, 2015; Holm-Hadulla, 2020), using municipal bonds and various public financing methods to fund various municipal activities (Ambrosius, 2019; Zedan et al , 2020), tapping the private sector’s coffers for developmental initiatives and the need for priority allocation of tax revenue for regional development. Research highlighting the performance of municipal bodies finds mixed evidence.…”