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- Title
An Empirical Examination of the Determinants of Insured Municipal Bond Issues.
- Authors
Denison, Dwight V.
- Abstract
Research demonstrates that there are interest cost savings associated with municipal bond insurance, and yet only half of the bonds are issued with insurance. The theoretical determinants of bond insurance are discussed and evaluated empirically through logistic regression. Statistically significant bond attributes are the underlying credit risk, maturity, par value, and a call option. In addition, regional market characteristics at the time of issue and market segmentations are determinants of bond insurance. These findings strengthen the hypotheses that insurance mitigates market segmentation and that insurers function as delegated monitors of bond quality.
- Subjects
BOND market; MUNICIPAL finance; GOVERNMENT securities; BOND insurance; MUNICIPAL bonds; INVESTMENT guaranty insurance
- Publication
Public Budgeting & Finance, 2003, Vol 23, Issue 1, p96
- ISSN
0275-1100
- Publication type
Article
- DOI
10.1111/1540-5850.2301005