An Empirical Study on the Determinants of Municipal Bond Issuance in Metropolitan and Basic Local Governments

Key Points

• Municipal bond issuance is significantly influenced by socioeconomic and political determinants, with varying effects across government types.
• The panel tobit model reveals that older population ratios and local tax revenues impact bond issuance differently in metropolitan and local governments.
• Findings show that bond issuance tends to decrease in election years, reflecting the political budget cycle effect.
• Metropolitan governments increased bond issuance during COVID-19, whereas local governments relied heavily on central government support, limiting their bond utilization.