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Credit Risk Of Icelandic Municipalities

Author

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  • Stefán B. Gunnlaugsson

    (Faculty of Business Administration, University of Akureyri, Iceland)

Abstract

In this article the results of an extensive research on the credit risk of Icelandic municipalities are presented. The methodology named after Altman was applied and the credit risk of Icelandic municipalities was assessed according to his model. In addition the relationship between financial health and the size of municipalities was examined. Finally a small study was conducted where the financial health of municipalities around the capital area was different from other. The results are that this methodology is useful when evaluating the credit risk of Icelandic municipalities. The findings indicate that Icelandic municipalities have been able to continue functioning financially even though being very weak financially. Smaller municipalities were on average much financially stronger than the larger ones. But there was not a statistical significant difference in the financial strength of municipalities around the capital to other municipalities around the country.

Suggested Citation

  • Stefán B. Gunnlaugsson, 2017. "Credit Risk Of Icelandic Municipalities," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 2(2), pages 7-15, September.
    • Handle: RePEc:ora:jrojbe:v:2:y:2017:i:2:p:7-15
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    File URL: http://ojbe.steconomiceuoradea.ro/wp-content/uploads/2017/09/OJBE_22_7-15.pdf
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    References listed on IDEAS

    as
    1. Bodkin, Ronald G & Conklin, David W, 1971. "Scale and Other Determinants of Municipal Government Expenditures in Ontario: A Quantitative Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 12(3), pages 465-481, October.
    2. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    3. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    4. Ohlson, Ja, 1980. "Financial Ratios And The Probabilistic Prediction Of Bankruptcy," Journal of Accounting Research, Wiley Blackwell, vol. 18(1), pages 109-131.
    5. L. R. Gabler, 1969. "Economies and Diseconomies of Scale in Urban Public Sectors," Land Economics, University of Wisconsin Press, vol. 45(4), pages 425-434.
    6. Mossman, Charles E, et al, 1998. "An Empirical Comparison of Bankruptcy Models," The Financial Review, Eastern Finance Association, vol. 33(2), pages 35-53, May.
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    Cited by:

    1. Stefán B. Gunnlaugsson, 2018. "Trading Rules On A Small Stock Market," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 3(1), pages 46-55, March.

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    More about this item

    Keywords

    Iceland; municipalities; credit risk; Altman Z.;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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