Municipal bonds as an instrument for financing local governments

Abstract

Increasing demands for improving the living standards of citizens at the local level require for local authorities to find new sources of funding. The experiences of developed countries and the fact that traditional sources of financing local governments are insufficient, indicate the growing importance of municipal bonds. The author emphasizes the special specifics of municipal bonds as a security. In addition, typical types of municipal bonds have been identified, indicating the characteristics of each. The benefits of issuing municipal bonds, i.e. the advantages of investing in this type of securities, were highlighted. Empirical research has shown which municipalities and cities in the Republic of Serbia have decided to issue municipal bonds, under what conditions and for what purpose the issue was made.

Keywords

• municipal bonds
• local government
• credit rating
• securities