Theoretical and Applied Economics
No. 1 / 2015 (602), Spring
Romanian municipal bond market at Bucharest Stock Exchange: further investigations
Babes-Bolyai University Cluj-Napoca, Romania
Maria-Andrada GEORGESCU
National University of Political Studies and Public Administration, Bucharest, Romania
Abstract. The sub-sovereign finance importance for emerging and frontier markets is constantly growing since the beginning of 21st century. The change in regulations governing Romanian municipalities source of financing in 1998, allowed local governments to access alternative financing sources, mainly for medium and long term investment projects, through bond issuance. A secondary market for municipal bond trading was launched at Bucharest Stock Exchange at the end of November 2001 and the exchange also offers a platform for announcement and subscriptions of municipal bond public offerings. Thus, more than a decade later, the Romanian municipal bond market segment remains in a premature stage of development.
The paper presents a comprehensive data set of Romanian municipal bond sector since it was launched in November 2001 until December 2013. The paper also reveals the level of Bucharest Stock Exchange (hereafter abbreviated as BVB) municipal bond segment underdevelopment after 12 years of trading. The findings highlight the factors influencing the trading decisions and might represent some suggested ides to be considered by their municipal bond issuers and the financial intermediaries assisting them. The investigations show that coupon and risk premium play only marginal roles in trading decisions hinting toward an unsophisticated market, dominated by a small number of institutional investors which rather treasure the scarce municipal bond offer. The absence of rating and the inappropriate correlation mainly between the risk premium and the economic potential of the issuer impair on further developments. The lack of sophistication displayed by the Romanian financial system, which also does not provide credit enhancements dedicated to local government, along with a thin domestic investor base are factors fencing, at least for the moment, the possibilities to overcome the rating problem and the offer diversity problem.
Contents
The credit impact on the economic growth
Predicting balance of payments crises for some emerging economies
Creativity and innovation – Sources of competitive advantage in the value chain of tourism enterprises
How to escape the middle income trap: international evidence from a binary dependent variable model
Land value dynamics with endogenous human and physical capital accumulation
Environmental Kuznets curve. Evidence from Romania
Effects of economic crisis on the distribution of earnings from Romania
An approach of social policy in terms of macro-stabilisation function
Economy recovery risks which Romanian companies has to cope with
The measurement of fiscal behavior in some European countries: Panel data perspective
Romanian municipal bond market at Bucharest Stock Exchange: further investigations
Inequality and economic growth: theoretical and operational approach
Measuring financial development in India: A PCA approach
Welfare costs due to economic fluctuations according to different model setups
The role of rating agencies in international financial market
Socioeconomic development index ranking calculations of cities with fuzzy clustering method: case of Turkey
Fiscal transparency in the European Union
Epistemic transfers in economics from social sciences
Accelerating the development of learning organizations: Shifting paradigms from current practice to human performance improvement
Transferring business intelligence and big data analysis from corporations to governments as a hybrid leading indicator
The impact of cultural and educational accumulations on entrepreneurial behaviour. Main issues encountered in theoretical approaches
Models for evaluating financial crisis – what went wrong for developed and emerging economies?
Impact of financial crisis on the decision making process for insurance consumers
Beyond the implementation of a dynamic stochastic general equilibrium model
How the legislation influenced the M&A transactions in Romania