Review of Literature on Subnational Government Borrowing

Abstract

Chapter 3 establishes the rationale for subnational government debt, the infrastructure pressures on subnational governments, and the context within which subnational government borrowing occurs. It begins with a review of the fiscal governance task in the face of demands for local infrastructure provision, and the institutional contexts of subnational government borrowing. The chapter then discusses how subnational government infrastructure provision and borrowing fit with a growing perspective of financial governance innovations. It continues with an introduction to capital-financing options, an overview of subnational government borrowing, and potential problems with subnational government borrowing. Then, the chapter explores fundamental dimensions of institutional contexts that affect subnational government borrowing. It ends by explicitly recognizing the role of information and setting a research agenda about efforts to improve information resolution institutions and mechanisms for information certification and monitoring.