IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v28y2021i5p343-348.html
   My bibliography  Save this article

Municipal merger and debt issuance in South African municipalities

Author

Listed:
  • Tsuyoshi Goto
  • Sandra Sekgetle
  • Takashi Kuramoto

Abstract

Existing research reveals opportunistic free-riding behaviours by municipalities facing mergers; these behaviours include over-issuance of debt before mergers because their burden will be shared by newly constructed municipalities. Nevertheless, the literature presents few solutions to this problem. We therefore investigate whether South African municipalities that faced mergers engaged in free-riding behaviours before the mergers. In South Africa, the upper government of municipalities implemented the monitoring of borrowings before mergers. Using a difference-in-differences analysis and quarterly data of South African municipalities, we find that South African municipalities decreased the amount of borrowings before their mergers. This result contradicts previous research, indicating that proper policy for municipal mergers may prevent the fiscal common pool problem caused by free-riding behaviours. To the best of our knowledge, our study is the first to demonstrate a reduction in borrowings before municipal mergers.

Suggested Citation

  • Tsuyoshi Goto & Sandra Sekgetle & Takashi Kuramoto, 2021. "Municipal merger and debt issuance in South African municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 28(5), pages 343-348, March.
    • Handle: RePEc:taf:apeclt:v:28:y:2021:i:5:p:343-348
    DOI: 10.1080/13504851.2020.1753872
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13504851.2020.1753872
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504851.2020.1753872?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hirota, Haruaki & Iwata, Kazuyuki & Tanaka, Kenta, 2022. "Is public official training effective at reducing costs? Evidence from survey data on Japanese municipal mergers," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 145-158.
    2. Hitoshi Saito & Haruaki Hirota & Hideo Yunoue & Miki Miyaki, 2023. "Do municipal mergers internalise spatial spillover effects? empirical evidence from Japanese municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 70(2), pages 379-406, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:28:y:2021:i:5:p:343-348. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.