How do financial markets respond to anticipated climate-driven wildfire risk? Using high-resolution meteorological forecasts, land use data, and U.S. municipal bond spreads, we find that municipalities facing greater future wildfire exposure already incur higher borrowing costs: A one standard...

How are financial markets responding to anticipated climate-driven wildfire risk increases? Combining high-resolution meteorological predictions and land use pattern maps with detailed US municipal bond data, this paper finds that municipalities facing higher future wildfire risk increases are...

Approximately 34% of local municipal bond issues were issued without ratings during 1998 to 2017. We study the circumstances that affect the decision to obtain a rating and whether unrated bonds, controlling for observable risk factors, are more expensive to issue than rated bonds. Issuers are...

Favorable tax treatment of coupon income, and unfavorable treatment of capital gains, lead municipal bonds to be issued with coupon rates substantially above market rates and an accompanying original issue premium. We present evidence that the size of the original issue premium is a response to...

This paper examines mean and volatility spillovers between four green municipal bonds issued by the US states of California, Colorado, Columbia and Ohio, and the role played by the recent Covid-19 pandemic and the COP policy announcements respectively. Specifically, four-variate VAR-GARCH-BEKK...

We show that dealer markups in the primary market for municipal bonds include risk premia that compensate dealers for bearing price risk. We also show that the markup per unit of risk tends to be higher for negotiated than competitive offerings, and that improvements in market transparency...

We study how regulation limiting ESG policies distorts financial market outcomes. In 2021 Texas enacted laws that prohibit municipalities from contracting with banks with certain ESG policies, leading to the exit of five of the largest municipal bond underwriters from the state. Issuers...

This paper examines mean and volatility spillovers between four green municipal bonds issued by the US states of California, Colorado, Columbia and Ohio, and the role played by the recent Covid-19 pandemic and the COP policy announcements respectively. Specifically, four-variate VAR-GARCH-BEKK...

According to data released by the RF Ministry of Finance, against the backdrop of deteriorating economic dynamic, the consolidated debt of the subjects and municipalities of the Russian Federation amounted to Rb3.16 trillion, or 2.09% of GDP, as of January 1, 2023. Despite an increase by Rb...

We study the effect of official statement textual complexity on municipal borrowing costs (yield) through the clientele channel. Theoretically, complexity reduces signal quality for unsophisticated investors, potentially increasing yield. We provide causal evidence of an economically significant...

Using a sample of Chinese municipal corporate bonds from 2011 to 2019, this paper investigates the effect of city-level air pollution on local government financing costs. We find that cities with severe air pollution tend to have higher municipal corporate bond spreads, indicating that air...

We examine the role of institutional investors in monetary policy transmission to asset markets by exploiting a discontinuous threshold in the tax treatment of municipal bonds. As bonds approach the threshold, mutual funds, the primary institutional traders in the market, dispose of the bonds at...

We examine the role of institutional investors in monetary policy transmission to asset markets by exploiting a discontinuous threshold in the tax treatment of municipal bonds. As bonds approach the threshold, mutual funds, the primary institutional traders in the market, dispose of the bonds at...

We show in this paper that tax exemptions on income from municipal bonds distort bank mortgage lending standards. Banks in states with a larger tax exemption hold more municipal bonds on their balance sheets. These holdings expose banks to local risks, in particular to real estate risk as...

I examine whether the imposition of fiduciary duty on municipal advisors affects bond yields and advising fees. Using a difference-in-differences analysis, I show that bond yields reduce by 9% after the imposition of the SEC Municipal Advisor Rule. Larger municipalities are more likely to...

We examine how coordination between elected officials and voters impacts local governments' borrowing costs. Using the Tax Cuts and Jobs Act as an identifying shock that implicitly raised the cost of local public goods for residents, we show in a difference-in-differences framework that the...

We investigate the role of information dissemination about cyberattacks through major newswires on municipal finance. Employing a difference-in-differences approach to identify causal effects, we find that county-level cyberattacks covered by the media cause increases in new offer yields and...

In this paper, we study how the political alignment between state governor party affiliation and counties affects yield spreads of municipal bonds issued by counties. Matching municipal bonds and gubernatorial election records at the county level, we present evidence that following close...

Natural resources are important assets in a region, and resource depletion may lead to the disappearance of local collateral, which may be priced by the capital market. This paper investigates the impact of resource depletion on the spread of municipal corporate bonds using data from the lists...

We revisit the tax-loss selling hypothesis as an explanation of the January effect. We expand on prior empirical evidence from municipal bond closed-end funds (CEFs) by extending the sample period by 19 years and adding exchange-traded funds (ETFs). Our sample covers the introduction and rapid...

A national issue of utmost importance is police misconduct, especially as it affects people of color. Tragic events involving police misconduct have led to proposals for police reform – which have run the gamut from abolishing the police, defunding the police, replacing the police for certain...

This paper provides estimates of the supply elasticity of municipal debt and explores heterogeneity across different types of local governments by exploiting a discrete jump in interest rates created by the Tax Reform Act (TRA) of 1986. In order to qualify for bank financing of tax-exempt debt,...

We examine recent regulation requiring US municipal governments to disclose private debt. We show that governments fail to disclose 55-80% of reportable debt events and that, conditional on disclosure, filings often omit contract details essential for bond pricing. Non-compliant issuers are also...

Approximately 34% of local municipal bond issues were issued without ratings during 1998 to 2017. We study the circumstances that affect the decision to obtain a rating and whether unrated bonds, controlling for observable risk factors, are more expensive to issue than rated bonds. Results show...

We examine the impact of the Tax Cuts and Jobs Act’s (TCJA, also known as the “Trump tax cuts”) cap on the state and local tax (SALT) deduction on the relationship between municipal bond spreads and real estate tax revenues by examining California counties’ financial and municipal bond...

This study investigates how will local political preference affect green municipal bonds’ issuance and pricing outcomes. We find that municipalities in Democratic party leaning counties (blue counties), as identified by U.S. presidential election votes, are more inclined to issue green...

Public mass shootings raise borrowing costs of issuers in affected counties by an average of six (five) basis points in the secondary (primary) market. This increase in tax-adjusted yield spreads is not driven by any material change in the issuers' fundamentals, nor by an increase in...

I study how asset prices vary with the risk exposures of heterogeneous financial intermediaries in the municipal bond market. Banks with local bank-branches, as marginal investors, price their interest rate risk exposure into offering yield spreads of bank-qualified bonds. The pricing of...

This paper explores which variables are more significant in municipal executive recommendation by citizens. We estimated the influence of public dimensions, such as municipe loyalty, municipe satisfaction, and municipe perceived value in municipal executive recommendation by citizens. Then, we...

This paper reveals a non-monotonic impact of local mutual funds on municipal bond issuance. Offering yields are higher in states with open-end municipal bond funds, and with larger aggregate fund size. However, holding local fund size constant, yields are decreasing in the number of funds. Such...