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Municipal Bond Markets

Author

Listed:
  • Dario Cestau

    (IE Business School, IE University)

  • Burton Hollifield

    (Carnegie Mellon University - David A. Tepper School of Business)

  • Dan Li

    (Federal Reserve Board)

  • Norman Schürhoff

    (University of Lausanne; Swiss Finance Institute; Centre for Economic Policy Research (CEPR))

Abstract

The effective functioning of the municipal bond market is crucial for the provision of public services, as it is the largest capital market for state and municipal issuers. Prior research has documented tax, credit, liquidity, and segmentation effects in municipal bonds. Recent regulatory initiatives to improve transparency have made granular trade data available to researchers, rendering it a natural laboratory to study financial intermediation, asset pricing in decentralized markets, and local public fi nance. Trade-by-trade studies have found large trading costs, contemporaneous price dispersion and other deviations from the law-of-one-price. More research is required to understand optimal market design and the impact of post-crisis regulation, sustainability, and financial technology.

Suggested Citation

  • Dario Cestau & Burton Hollifield & Dan Li & Norman Schürhoff, 2018. "Municipal Bond Markets," Swiss Finance Institute Research Paper Series 18-69, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1869
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    Citations

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    Cited by:

    1. Gabor Pinter & Semih Uslu, 2022. "Comparing search and intermediation frictions across markets," Bank of England working papers 974, Bank of England.
    2. Thomas Luke Spreen & Ed Gerrish, 2022. "Taxes and tax‐exempt bonds: A literature review," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 767-808, September.
    3. John M. Griffin & Nicholas Hirschey & Samuel Kruger, 2023. "Do Municipal Bond Dealers Give Their Customers “Fair and Reasonable” Pricing?," Journal of Finance, American Finance Association, vol. 78(2), pages 887-934, April.
    4. Jha, Chandan Kumar & Joshi, Swarup, 2023. "Municipal bankruptcies and crime," International Review of Financial Analysis, Elsevier, vol. 89(C).
    5. Peterson, Mark A., 2024. "Investor flows, performance, and fragility of U.S. municipal bond mutual funds," Journal of Financial Stability, Elsevier, vol. 72(C).
    6. Laura PANOIU & Alina VOICULET, 2020. "Financing Public Health System By Municipal Bonds – A Solution In The Current Pandemic," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 5(2), pages 99-107.
    7. Inhwan Ko & Aseem Prakash, 2022. "Signaling climate resilience to municipal bond markets: does membership in adaptation-focused voluntary clubs affect bond rating?," Climatic Change, Springer, vol. 171(1), pages 1-19, March.

    More about this item

    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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