2024 Fall Seminar Series Seminar: Igor Cunha University of Kentucky

A Century of Municipal Bond Financing

Co-authors: Gustavo S. Cortes (University of Florida) & Klenio Barbosa (SKEMA Business School)

Abstract

This paper presents a comprehensive analysis of municipal bond markets over the last 110 years using novel hand-collected data. We document a sizable reduction in average maturities from 30 to 10 years. Two key factors shaped these changes: macroeconomic shifts following the Great Depression and changes in the investor base due to tax reforms in the 1980s. Our findings reveal the vulnerability of short-term municipal debt during natural disasters, emphasizing the need for debt management strategies. Our results highlight how tax policies and evolving investor dynamics critically influence the resilience of municipal financing.