A Theory of Subnational Government Capital Market Information

Information Resolution and Subnational Capital Markets Pub Date : 2021-09-23 DOI:10.1093/oso/9780190089337.003.0002

Christine R. Martell, Tima T. Moldogaziev, Salvador Espinosa

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Abstract

Chapter 2 develops the theoretical base for why and how information resolution is expected to relate to subnational government capital market borrowing by reviewing and extending the corporate finance literature. Based on theories of information, it argues that although countries must have a certain level of maturity along economic, financial and market, political, and legal institutions before successfully managing a well-functioning capital market, the crowning factor behind an efficient subnational government credit market, beyond the fundamental dimensions of institutional maturity, is credit contractibility in the system and tools of information certification and monitoring available to subnational governments. This chapter details how information problems manifest in credit contractibility, reviews how information relates to capital finance, and applies theories of capital markets to subnational government borrowing, debt size, and debt composition. It discusses how information resolution institutions and credit quality can enhance subnational government capital markets and proposes testable hypotheses.

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地方政府资本市场信息理论

第2章通过回顾和扩展公司财务文献，为信息决议为何以及如何与地方政府资本市场借贷相关提供了理论基础。基于信息理论，它认为，尽管在成功管理一个运作良好的资本市场之前，国家必须在经济、金融和市场、政治和法律制度方面达到一定程度的成熟，但一个有效的地方政府信贷市场背后的最重要因素，超出了制度成熟度的基本维度，地方政府是否有信用收缩的系统和信息认证和监控工具?本章详细介绍了信息问题如何在信贷收缩中表现出来，回顾了信息与资本融资的关系，并将资本市场理论应用于地方政府借款、债务规模和债务构成。讨论了信息解决机制和信用质量如何促进地方政府资本市场的发展，并提出了可检验的假设。

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Information Resolution and Subnational Capital Markets

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