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Conventional wisdom argues that competitive bidding, compared to negotiated sale, can reduce the interest cost of municipal bonds in the primary market. Studies correcting for self‐selection bias have mixed findings. However, these studies are subject to some potential methodological issues. This study circumvents these pit‐falls and provides an estimate of the heterogeneous average treatment effect (ATE). After correcting for the endogeneity bias of sale method and its interaction effect, on average competitive sale still significantly lowers the interest rate, but the interest cost advantage decreases as issuer experience increases.

This article revisits government failure theory by examining the relationship between government decentralization and the size of the nonprofit sector (NPS). Government failure theory posits that nonprofits are most active in regions where the largest gap exists between the homogeneous supply of public service and heterogeneous citizen demands. Following this theory, government decentralization should decrease the size of the NPS, as it increases the efficiency and heterogeneity of government services. This article tests this hypothesis using a sample of U.S. counties. Decentralization is measured in two dimensions: vertical decentralization and horizontal fragmentation. After using instrumental regressions to eliminate the endogeneity bias, we find that counties with a more horizontally fragmented governmental system are associated with a larger NPS. Vertical centralization leads to a denser NPS but has no impact on the NPS revenue or assets. The impacts of resident heterogeneity are also mixed. As such, government failure theory is only partially supported, at best. Contrarily, interdependence theory is supported by this study.

This article explores the question of whether bond insurers are able to sufficiently evaluate the credit risk of insured bonds, the answer to which would determine the future of municipal bond insurance. A sample of insured municipal bonds is investigated to determine whether bond insurance premia can predict the future credit rating transition, the proxy for bond credit risk. The results show that municipal bond insurance premia, conditional on bond credit ratings and other explanatory variables, have explanatory power over credit rating downgrades but not over upgrades. As such, bond insurance premia convey extra information about the underlying credit risk of a bond issue than the original credit rating reveals. This research also provides evidence that the rating agencies might not be doing as a good job as they could potentially do.

This study examines the impact of religious environments on the jurisdictional density of nonprofit organizations. It has been argued that religiosity can affect nonprofit activities by promoting prosocial attitudes, collectivism, collaborating and bonding, and business ethics. While prior research has investigated the effects of religiosity on various aspects associated with nonprofit activities, such as volunteering, generosity, nonprofit management, and prosocial attitudes, there remains a dearth of studies exploring the direct relationship between religious environment and the size of nonprofit sectors. Existing research yields mixed results with certain limitations. This research addresses these limitations and finds that a more vibrant religious environment contributes to a higher density of both religious and nonreligious nonprofit organizations. The study also finds that the effect is more pronounced in areas with a higher government presence. This finding is consistent with the prediction of interdependence theory but not government failure theory.

Using a panel dataset of 206 non‐U.S. subnational governments from 31 countries between 2004 and 2010, this study investigates the relationship between economic openness and sub‐sovereign borrowings. We find that financial openness generates a positive impact on the size of subnational obligations in developing countries but a negative effect in developed countries. It also improves the credit ratings of subnational jurisdictions regardless of the country's development status. However, trade openness does not show any effects on subnational borrowings. To account for these findings that cannot be fully explained by existing theories, we propose a new efficiency hypothesis.

This study reviews State Infrastructure Banks (SIBs) as an innovative financing mechanism for federal and state governments to support transportation financing for local governments, and determines the cost savings realized by local governments from receiving SIB loans rather than financing through the municipal bond market. The study finds that SIBs provide a mechanism through which local governments receive subsidized loans for their transportation investments. With the Ohio SIB, localities realized average borrowing cost savings between 34 and 184 basis points. Under the worst‐ and best‐case scenarios, 83 and 98 percent of projects, respectively, benefited from lower borrowing costs.