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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Main Authors: HUANG, Daisy, KUMAR, Amit
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2021
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Online Access: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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spelling 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
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Municipal Bonds
Drinking Water Pollution
PFAS
Forever Chemicals
Finance
Finance and Financial Management
spellingShingle Municipal Bonds
Drinking Water Pollution
PFAS
Forever Chemicals
Finance
Finance and Financial Management
HUANG, Daisy
KUMAR, Amit
Polluted waters and municipal finance
description 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.
format text
author HUANG, Daisy
KUMAR, Amit
author_facet HUANG, Daisy
KUMAR, Amit
author_sort 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
publisher Institutional Knowledge at Singapore Management University
publishDate 2021
url 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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