External Financing of Hungarian Local Governments: Knowledge and Attitude
cytuj
pobierz pliki
RIS BIB ENDNOTEWybierz format
RIS BIB ENDNOTEExternal Financing of Hungarian Local Governments: Knowledge and Attitude
Data publikacji: 2011
Zarządzanie Publiczne, 2011, Numer 4 (16), s. 81 - 93
https://doi.org/10.4467/20843968ZP.12.030.0497Autorzy
External Financing of Hungarian Local Governments: Knowledge and Attitude
The drastic increase in volume of local government debt in Hungary started in 2006. From that year to 2009 the value of municipal bonds issued increased sevenfold and exceeded USD 1 billion. My hypothesis assumes that a supposable improvement in local municipal financial management may have resulted in the spread of bond issue, which in Hungary is still considered innovative.
My research, which was based on a stratified sample of 308 Hungarian municipalities, came to the conclusion that expertise of local governments’ financial executives related to loan financing (including also bond financing) is extremely low. As an interval estimation, we can conclude that practically 31–39% of all the Hungarian municipalities have no professional knowledge in this field. Based on my survey, the least right answers were given to statements relating to bond financing itself, though most respondents knew that long term borrowing’s priority is investment. The majority of local governments are unable to distinguish the economic differences between bank loans and bonds, and are unclear concerning the potential benefits, advantages, and disadvantages of bonds. No wonder that nearly all the bonds were issued privately where the buyers were solely commercial banks. In addition, 12–18% of the municipalities has prejudices and clearly has misconceptions about obtaining funds through borrowing.
According to the results of principal component analysis local governments’ knowledge level can be classified and explained by three components: theoretical knowledge of local borrowing, knowledge of legal and administrative regulation, and skill in capital market financing. By summing up the results of the research it can be stated that the improvement in local financial management couldn’t have been the primary reason for municipal bond boom, but there were external factors that determined and dominated this process of booming.
Dafflon B. (2002), The Requirement of a Balanced Budget and Borrowing Limits in Local Public Finance: Setting Out the Problems, [in:] B. Dafflon (ed.), Local Public Finance in Europe: Balancing the Budget and Controlling Debt, Edward Elgar, Cheltenham–Northampton, p. 1–13.
Freire M., Petersen J. (2004), Political, Legal and Financial Framework, [in:] M. Freire, J. Petersen (ed.), Subnational Capital Markets in Developing Countries, The World Bank – Oxford University Press, New York.
Kovács G. (2008), Financing Local Governments’ Investments in Hungary by Issuing Municipal Bonds: Experiences and Future Prospects, [in:] L. Vass, K.-O. Olena, C. Pollitt (ed.), Leadership and Management in the Public Sector: Values, Standards and Competencies in Central and Eastern Europe, LGI/OSI, Bratislava, p. 119–131.
Musgrave R. (1959), The Theory of Public Finance, McGraw-Hill, New York.
Noel M. (2000), Building Subnational Debt Markets in Developing and Transition Economies, “Policy Research Working Paper” 2339, The World Bank, Washington DC.
Petersen J., Miguel V. (2004), Borrowing Instruments and Restrictions on Their Use, [in:] M. Freire, J. Petersen (ed.), Subnational Capital Markets in Developing Countries, The World Bank – Oxford University Press, New York.
Petersen J., Valadez M. (2004), Borrowing Instruments and Restrictions on Their Use, [in:] M. Freire, J. Petersen (ed.), Subnational Capital Markets in Developing Countries, The World Bank – Oxford University Press, New York.
Swianiewicz P. (2004), The Theory of Local Borrowing and the West-European Experience in Local Government Borrowing, [in:] P. Swianiewicz (ed.), Risk and Rewards, Open Society Institute, Budapest.
Ter-Minassian T. (1996), Borrowing by Subnational Governments: Issues and Selected International Experience, “IMP Paper on Policy Analysis Assessment” 9614, Washington DC.
Informacje: Zarządzanie Publiczne, 2011, s. 81 - 93
Typ artykułu: Oryginalny artykuł naukowy
Tytuły:
External Financing of Hungarian Local Governments: Knowledge and Attitude
External Financing of Hungarian Local Governments: Knowledge and Attitude
Széchenyi István University, Győr, Hungary
Publikacja: 2011
Status artykułu: Otwarte
Licencja: Żadna
Udział procentowy autorów:
Korekty artykułu:
-Języki publikacji:
AngielskiLiczba wyświetleń: 2275
Liczba pobrań: 802