Suchergebnisse

Many municipal governments face the challenge of temporary cash deficits due to the mismatched schedules of cash flow‐ins and flow‐outs. To smooth the temporary deficits, they can use either internal financial resources such as financial slack or external financial resources such as short‐term borrowing. This paper applies the pecking order theory to examine municipal governments' financial preference when they experience cash flow problems. Results show that municipal governments prefer accumulated financial slack to short‐term borrowing when both options are available. This finding demonstrates financial slack's role as a convenient cash management tool in municipal financial management. It also suggests the applicability of the pecking order theory in future public financial management research.

AbstractIn this article, I study the effect of the Money Market Fund Liquidity Facility (MMLF) on corporate short‐term borrowing costs. Although MMLF loans accept a broader range of collateral acquired from money market funds (MMFs) than Asset‐Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF) loans, their higher loan rates could make the intervention less effective. I find the average yield has decreased by 20–24 basis points. The yield‐decreasing effects of the MMLF are stronger for securities issued by eligible non‐US firms, non‐asset‐backed commercial paper securities that are newly accepted as collateral under the MMLF, and securities held by affiliated MMFs. However, I do not find an additional yield‐decreasing effect of the MMLF on lower rated securities or nonfinancial sector securities. After the implementation of the MMLF, domestic MMFs seem to increase the weight of nonfinancial sector securities, which helps them achieve a higher return.

AbstractLocal governments aim to accumulate slack resources to mitigate economic turbulence. Yet efforts to increase multiple slack resources could hinder accumulation. This paper examines whether increasing one form of slack is detrimental to the accumulation of another. By using data from 672 New York local governments from 1996 to 2016, this article examines the impact of excess taxing capacity, or unused property taxing authority, on unrestricted cash and short‐term borrowing. Regression results indicate that short‐term resources are reduced to boost excess taxing capacity for counties to suggest cash flows can be hindered by increasing political forms of slack.