2003
DOI: 10.1081/pad-120018301
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Municipal Investment, Borrowing, and Pricing Under Decentralization: The Brazilian Case

Abstract: Very few researchers have addressed the long-term financing arrangements of municipal governments in developing countries. No research has evaluated empirically either the elements that affect municipal borrowing in developing countries or what those elements reveal about the municipal credit system. Analyzing Brazilian municipal loan and financial data with a series of simultaneous equations, this paper addresses the following questions: What factors determine municipal government investment levels, borrowing… Show more

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Cited by 4 publications
(4 citation statements)
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“…The control of borrowing through quantity, not price, has left a municipal borrowing system with little alignment between risk and return. There is evidence of subsidies to poorer municipalities, allocation to the municipalities with outstanding debt, and economy-of-scale pricing (Martell, 2003). The potential consequence of this arrangement is that the federal government bears the burden of default risk, which does little to discipline municipal borrowers, and ultimately could destabilise macroeconomic goals and undermine local authority.…”
Section: Stringent Constraints On Local Government Indebtednessmentioning
confidence: 93%
See 2 more Smart Citations
“…The control of borrowing through quantity, not price, has left a municipal borrowing system with little alignment between risk and return. There is evidence of subsidies to poorer municipalities, allocation to the municipalities with outstanding debt, and economy-of-scale pricing (Martell, 2003). The potential consequence of this arrangement is that the federal government bears the burden of default risk, which does little to discipline municipal borrowers, and ultimately could destabilise macroeconomic goals and undermine local authority.…”
Section: Stringent Constraints On Local Government Indebtednessmentioning
confidence: 93%
“…The claims in this review are drawn from a series of studies of Brazilian municipal borrowing systems and legislation conducted by Martell (2000Martell ( , 2003Martell ( , 2004Martell ( and 2007. Two of the studies (2000,2003) empirically assess the relationship between loan data (amount, price) and explanatory factors.…”
Section: Applicationmentioning
confidence: 99%
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“…Two general systems that frame access to credit by sub-national governments can be distinguished (Martell 2003). One is the so-called relationship-based system, whereby borrowers are regulated by a set of norms intended to "protect" them from default.…”
Section: The Institutional Contextmentioning
confidence: 99%