Polluted waters and municipal finance
We show that pollution increases the offering yields of municipal bonds, indicating increased risk. We establish this using a difference-in-differences design, comparing the bonds from U.S. counties revealed to contain per- and poly-fluoroalkyl substances (PFAS) in their drinking-water supplies with...
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Institutional Knowledge at Singapore Management University
2021
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sg-smu-ink.lkcsb_research-80422022-08-02T07:52:25Z Polluted waters and municipal finance HUANG, Daisy KUMAR, Amit We show that pollution increases the offering yields of municipal bonds, indicating increased risk. We establish this using a difference-in-differences design, comparing the bonds from U.S. counties revealed to contain per- and poly-fluoroalkyl substances (PFAS) in their drinking-water supplies with the bonds from neighboring, unpolluted, same-state counties. The increase was greater for riskier bonds characterized by repayment obligation, ex-ante debt burden, unrated issuance, maturity, and bankruptcy access. The resulting pollution-related investment needs and a reduction in public sector employment and expenditure likely underlie the risk. An instrumental variable-like method utilizing airports as a potential contamination source reaffirms the causal interpretation. 2021-04-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/lkcsb_research/7043 info:doi/10.2139/ssrn.3821639 https://ink.library.smu.edu.sg/context/lkcsb_research/article/8042/viewcontent/SSRN_id3821639.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University Municipal Bonds Drinking Water Pollution PFAS Forever Chemicals Finance Finance and Financial Management |
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Municipal Bonds Drinking Water Pollution PFAS Forever Chemicals Finance Finance and Financial Management HUANG, Daisy KUMAR, Amit Polluted waters and municipal finance |
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We show that pollution increases the offering yields of municipal bonds, indicating increased risk. We establish this using a difference-in-differences design, comparing the bonds from U.S. counties revealed to contain per- and poly-fluoroalkyl substances (PFAS) in their drinking-water supplies with the bonds from neighboring, unpolluted, same-state counties. The increase was greater for riskier bonds characterized by repayment obligation, ex-ante debt burden, unrated issuance, maturity, and bankruptcy access. The resulting pollution-related investment needs and a reduction in public sector employment and expenditure likely underlie the risk. An instrumental variable-like method utilizing airports as a potential contamination source reaffirms the causal interpretation. |
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text |
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HUANG, Daisy KUMAR, Amit |
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HUANG, Daisy KUMAR, Amit |
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HUANG, Daisy |
title |
Polluted waters and municipal finance |
title_short |
Polluted waters and municipal finance |
title_full |
Polluted waters and municipal finance |
title_fullStr |
Polluted waters and municipal finance |
title_full_unstemmed |
Polluted waters and municipal finance |
title_sort |
polluted waters and municipal finance |
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Institutional Knowledge at Singapore Management University |
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2021 |
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https://ink.library.smu.edu.sg/lkcsb_research/7043 https://ink.library.smu.edu.sg/context/lkcsb_research/article/8042/viewcontent/SSRN_id3821639.pdf |
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