To file or not to file: the causes of municipal bankruptcy in the united states
Journal of Public Budgeting, Accounting & Financial Management
ISSN: 1096-3367
Article publication date: 1 March 2004
Abstract
About 500 municipalities have declared bankruptcy since Congress passed the Municipal Bankruptcy Act in 1937. Based on the experiences of these municipalities and the municipal bankruptcy literature, this paper develops a theory of why municipalities go bankrupt and discusses various ways to prevent other municipalities from going bankrupt. The paper identifies three-dimensional factors that may make municipalities go bankrupt: long-term and short-term, political and economic, and internal and external perspectives. The paper ends with an observation that government failure in the form of municipal bankruptcy can be reduced by strengthening the audit powers of the states and by utilizing more municipal bond and liability insurance policies.
Citation
Park, K. (2004), "To file or not to file: the causes of municipal bankruptcy in the united states", Journal of Public Budgeting, Accounting & Financial Management, Vol. 16 No. 2, pp. 228-256. https://doi.org/10.1108/JPBAFM-16-02-2004-B006
Publisher
:Emerald Publishing Limited
Copyright © 2004 by PrAcademics Press