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Article
Publication date: 5 August 2019

Vaseem Akram and Badri Narayan Rath

The purpose of this paper is to examine the convergence analysis of public debt among Indian states using annual data from 1990‒1991 to 2014‒2015.

Abstract

Purpose

The purpose of this paper is to examine the convergence analysis of public debt among Indian states using annual data from 1990‒1991 to 2014‒2015.

Design/methodology/approach

The paper tests this hypothesis using club convergence technique propounded by Phillips and Sul (2007).

Findings

The results reveal the existence of debt divergence for overall Indian states. States are formed into four clubs on the basis of their level of debt, and three clubs support the hypothesis of club convergence. Further, the total public debt decomposes into three compositions such as market loans, bank loans and loans and advances from the central government. The existence of convergence is found for market loans and bank loans; however, the presence of divergence is found in case of loans and advances for overall states.

Practical implications

Since public debt plays an important role for fiscal health of the Indian states, findings of this study suggest to squeeze the fiscal consolidation further for Indian states whose debts as a percentage to gross state domestic product are on the higher side. Further, the examination of debt convergence helps to manage debt level among the states because heavy dependence on public debt could retard investment and economic growth.

Originality/value

Whereas bulk of empirical studies emphasize on examining the linkage between public debt and economic growth, and issue on debt sustainability across Indian states, examination of convergence of debt and its compositions (markets borrowings, bank loans and loans and advances from the central government) among the Indian states is scanty.

Details

Journal of Economic Studies, vol. 46 no. 4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 3 August 2018

Jorge Olmo Vera

The purpose of this paper is to evaluate the impact of the Law on Budgetary Stability of 2012 over the level of accumulated debt in Spanish municipalities. The paper also…

Abstract

Purpose

The purpose of this paper is to evaluate the impact of the Law on Budgetary Stability of 2012 over the level of accumulated debt in Spanish municipalities. The paper also analyses the influence of the socioeconomic environment, political factors and budgetary indicators on the level of accumulated debt for the 2008–2014 period, which coincides with the economic crisis.

Design/methodology/approach

The paper uses panel data methodology. First, the t-test of difference of means is used to analyse which political variables are significant. Then, the analysis is carried out using the generalised method of moments in order to obtain the explanatory variables of the level of debt.

Findings

The results show that in 2013–2014, the Law on Budgetary Stability did not have a significant effect on reducing the accumulated debt. However, the law has led to a change of the trend in debt levels, as the debt decreased from 2013 to 2014. Moreover, population, unemployment, immigration, personnel expenditure, direct fiscal pressure and level of investment have an influence over the level of accumulated debt.

Originality/value

This paper contributes to analyse to what extent the Law on Budgetary Stability has affected accumulated debt. The study reveals a slight impact on reducing debt, although it is not significant. An original aspect of this paper is that it uses dynamic models to study the accumulated debt of Spanish municipalities. The study shows the impact of socioeconomic, environmental and political factors as well as of budgetary indicators on the level of debt in the context of economic crisis.

Propósito

En este artículo se analiza el impacto que tiene la normativa de estabilidad presupuestaria española del año 2012 en el nivel de deuda acumulada de los municipios españoles. También se contrasta la influencia del entorno socioeconómico, político y presupuestario en el nivel de deuda viva durante el periodo 2008-2014 que coincide con la crisis económica.

Diseño/metodología/enfoque

Para alcanzar los objetivos, se utiliza la metodología de datos de panel. En primer lugar, se realiza un test de medias por el cual se descartan las variables políticas no significativas. Posteriormente, se plantea el Método Generalizado de Momentos (GMM) para obtener las variables explicativas del endeudamiento.

Hallazgos

Se evidencia que durante el periodo 2013-2014, la normativa de estabilidad no ha tenido un efecto significativo en la reducción de la deuda viva. No obstante, la legislación ha permitido cambiar la tendencia del nivel de deuda, ya que durante 2013-2014 el endeudamiento se redujo. Además, se constata que la población, el desempleo, la inmigración, la concentración política, los gastos de personal, la presión fiscal y la inversión influyen en el endeudamiento.

Originalidad/valor

La aportación de este trabajo radica en analizar en qué medida ha repercutido la normativa de estabilidad presupuestaria en el nivel de deuda viva. Se ha evidenciado un ligero impacto en la reducción de endeudamiento, aunque no es significativo. Resulta original la aplicación de modelos dinámicos en el estudio de la deuda viva española. Asimismo, se establece el impacto que tienen los factores del entorno político, socioeconómico y presupuestario en un entorno de crisis económica.

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Article
Publication date: 6 November 2017

John Dove

With a newly developed measure of economic freedom across US local government jurisdictions, this paper aims to estimate the relationship between economic freedom and bond ratings.

Abstract

Purpose

With a newly developed measure of economic freedom across US local government jurisdictions, this paper aims to estimate the relationship between economic freedom and bond ratings.

Design/methodology/approach

The author uses a battery of cross-sectional econometric models to identify the impact that economic freedom might have on bond ratings using a sample of US municipal governments.

Findings

Overall, the results indicate that relatively more economic freedom within a local jurisdiction is associated with higher bond ratings and thus lower borrowing costs. However, similar to Roychoundhury and Lawson (2010), no specific subcomponent seems to affect bond ratings.

Originality/value

To the author’s knowledge this is the first scholarly work to address this topic at the local level.

Details

Journal of Financial Economic Policy, vol. 9 no. 4
Type: Research Article
ISSN: 1757-6385

Keywords

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Article
Publication date: 2 January 2019

Paulo Rogério Faustino Matos and Jaime de Jesus Filho

This paper aims to address the discussion on the credit disbursement of US$28.6bn from Brazilian National Economic and Social Development Bank (BNDES) to Brazilian state…

Abstract

Purpose

This paper aims to address the discussion on the credit disbursement of US$28.6bn from Brazilian National Economic and Social Development Bank (BNDES) to Brazilian state governments during the period from 2009 to 2014. They try to identify the main drivers of the credit allocation in both cross state and time.

Design/methodology/approach

The authors use a dynamic balanced panel to estimate the role of technical and socioeconomic variables.

Findings

The results suggest that the states’ need for financing via BNDES exhibits neither inertial nor explosive behavior. The authors find an efficiency elasticity of this resource of 0.20. In addition, the impact of a positive change in the state fiscal status leads to an increase of 2.5 per cent in the indebtedness capacity. Finally, they find that wealthier states are more successful in demanding credit from BNDES.

Practical implications

This analysis of resource allocation is useful for modeling the determinants of international financial institutions as central planners. The authors also invite researchers to discuss the decision-making processes that characterize the federative pact in Brazil.

Originality/value

Although a burgeoning body of literature has examined the role of BNDES as a creditor institution for firms, its relationship with the public sector, in special subnational governments, has been rarely studied.

Details

Journal of Financial Economic Policy, vol. 11 no. 2
Type: Research Article
ISSN: 1757-6385

Keywords

Content available
Article
Publication date: 13 December 2019

Shiyi Chen and Wang Li

With China’s economic growth slowing down and the growth rate of fiscal revenue decreasing, the pressure on local government debts is further increasing. Under this…

Abstract

Purpose

With China’s economic growth slowing down and the growth rate of fiscal revenue decreasing, the pressure on local government debts is further increasing. Under this background, it is of great significance to clarify the relation between local government debts and China’s economic growth in order to give full play to the positive role of local debts in stabling growth. The paper aims to discuss this issue.

Design/methodology/approach

Therefore, this paper explores the impact of Chinese local government debt on economic growth from theoretical and empirical aspects, respectively, and compares the regional differences between different debts and economic growth dynamics.

Findings

In the theoretical model part, this paper constructs a three-sector dynamic game model, under the two circumstances of whether local government is subject to debt constraints, and examines the relation between local government debt and economic growth and other variables through numerical simulation. Research shows that when the government is not constrained by debt, there is an inverted “U” relation between government debt and economic growth. When the government is constrained by debt, the economic growth rate gradually decreases as the government debt increases.

Originality/value

In the theoretical analysis part, this paper tries to estimate the amount of local debts under different calibers and examines the impact of different types of local government debts on China’s economic growth and their regional differences. The results show that excessive accumulation of government hidden debts in the eastern region is not conducive to economic growth, while explicit debts in the central and western regions significantly contribute to local economic growth. The results of empirical analysis are basically consistent with the predictions of the theoretical model.

Details

China Political Economy, vol. 2 no. 2
Type: Research Article
ISSN: 2516-1652

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Article
Publication date: 3 September 2018

Stephan David Whitaker

The purpose of this paper is to measure how frequently innovative financial products appeared or became widely adopted in the municipal securities markets over the last…

Abstract

Purpose

The purpose of this paper is to measure how frequently innovative financial products appeared or became widely adopted in the municipal securities markets over the last two decades; and also investigate what types of issuers adopted the innovations, the relationship between yields and innovation and the patterns of diffusion within states.

Design/methodology/approach

Using comprehensive data on municipal securities issued from 1992 to 2015, the author searches for financial innovations as defined in the literature. The author uses issuer fixed effects models to characterize the relationship between yields and use of innovative products. Other models provide estimates of the conditional correlations between issuer characteristics and innovation usage. Finally, the author fits trend models to identify significant differences in the pace of adoption between different types of issuers.

Findings

In total, 35 security features fit one or more definitions of innovation. Extensive analysis is presented for four innovations that represent significant transfers of risk: variable rates, put options, corporate backers and derivatives. Small issuers used these innovative products, but the largest issuers adopted them to a greater extent. Usage appears to diffuse within states. Issuance of innovative securities fell during the financial crisis and has not recovered. Novel securities since the financial crisis have been created by legislation rather than by market participants.

Research limitations/implications

The data appear to cover all or nearly all municipal securities, but they do not cover loans or other types of municipal borrowing.

Practical implications

This analysis reveals that financial innovations in municipal securities markets usually take the form of a rare practice becoming widespread rather than a never-before-seen feature appearing in the market. Changes in response to legislation are an exception.

Social implications

Regulators concerned about financial stability can monitor the expansion of formerly rare securities features. This will be informative about new risks or transfers of risk in the market. They can also anticipate that expanded use of an innovation by states and high-volume issuers will be followed by adoption of the innovations by smaller, less sophisticated issuers in subsequent years.

Originality/value

This paper is the first attempt to empirically analyze the extent of financial innovation in municipal securities. Existing public finance literature has proposed definitions of financial innovation, qualitatively documented some specific innovations and empirically analyzed others. However, no previous study has empirically analyzed the entire municipal securities market for all possible innovations.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 30 no. 3
Type: Research Article
ISSN: 1096-3367

Keywords

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Article
Publication date: 18 April 2008

Vinod Kumar Khanna

To provide an insight of the intricacies of ion‐sensitive field‐effect transistor (ISFET) encapsulation and describe the presently available packaging solutions…

Abstract

Purpose

To provide an insight of the intricacies of ion‐sensitive field‐effect transistor (ISFET) encapsulation and describe the presently available packaging solutions, indicating how the packaging requirements can be complied for various applications.

Design/methodology/approach

ISFET packaging is a complete subject in itself. The paper includes examples of the different packaging strategies that have been offered by literature and company findings over the past few decades.

Findings

ISFET packaging has progressed from the initial epoxy embedding of the wire bonds and contact pads to the more sophisticated techniques capable of automation wherein moulds are made for epoxy coating or the chip is tightened between contacting parts using elastomer gaskets.

Research limitations/implications

The emerging packaging technologies have succeeded in making chip packaging more a science than an art, and the new methods are capable of large‐scale manufacturing with greater precision.

Practical implications

Packaging solutions for demanding applications of ISFETs have been provided by the upcoming technologies.

Originality/value

The information provided in this paper is of immense value to researchers working on ISFET encapsulation.

Details

Microelectronics International, vol. 25 no. 2
Type: Research Article
ISSN: 1356-5362

Keywords

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