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Subnational Debt Finance and the Global Financial Crisis

Author

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  • Otaviano Canuto
  • Lili Liu

Abstract

This note focuses on the impact of the global financial crisis on subnational debt financing. We approach the following questions: Why is subnational debt financing important? What are the impacts of the crisis on the fiscal balance and financing cost of subnational governments (SNGs)? What explains the variations across countries in the ability of SNGs to proactively address the threat of fiscal deterioration? And, equally important, what are the long-term structural challenges facing SNGs in sustainable financing of infrastructure and social services?
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Suggested Citation

  • Otaviano Canuto & Lili Liu, 2010. "Subnational Debt Finance and the Global Financial Crisis," World Bank Publications - Reports 10186, The World Bank Group.
    • Handle: RePEc:wbk:wboper:10186
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    References listed on IDEAS

    as
    1. Liu, Lili & Tan, Kim Song, 2009. "Subnational credit ratings : a comparative review," Policy Research Working Paper Series 5013, The World Bank.
    2. Ianchovichina, Elena & Liu, Lili & Nagarajan, Mohan, 2006. "Subnational fiscal sustainability analysis : what can we learn from Tamil Nadu ?," Policy Research Working Paper Series 3947, The World Bank.
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    Cited by:

    1. Ms. Eva Jenkner & Zhongjin Lu, 2014. "Sub-National Credit Risk and Sovereign Bailouts: Who Pays the Premium?," IMF Working Papers 2014/020, International Monetary Fund.
    2. Beck, Roland & Ferrucci, Gianluigi & Hantzsche, Arno & Rau-Göhring, Matthias, 2017. "Determinants of sub-sovereign bond yield spreads – The role of fiscal fundamentals and federal bailout expectations," Journal of International Money and Finance, Elsevier, vol. 79(C), pages 72-98.
    3. Dethier, Jean-Jacques & Morrill, Curtis, 2012. "The great recession and the future of cities," Policy Research Working Paper Series 6256, The World Bank.
    4. Salvador Barrios & Diego Martínez-López, 2017. "Fiscal equalization schemes and subcentral government borrowing," Chapters, in: Naoyuki Yoshino & Peter J. Morgan (ed.), Central and Local Government Relations in Asia, chapter 4, pages 130-160, Edward Elgar Publishing.
    5. Ioannou, Stefanos & Wójcik, Dariusz & Pažitka, Vladimír, 2021. "Financial centre bias in sub-sovereign credit ratings," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 70(C).
    6. David Bartolini & Agnese Sacchi & Simone Salotti & Raffaella Santolini, 2018. "Fiscal Decentralization in Times of Financial Crises," CESifo Economic Studies, CESifo Group, vol. 64(3), pages 456-488.
    7. Lars P. Feld & Ekkehard A. Köhler & Julia Wolfinger, 2020. "Modeling fiscal sustainability in dynamic macro-panels with heterogeneous effects: evidence from German federal states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(1), pages 215-239, February.
    8. Canuto, Otaviano & Liu, Lili, 2013. "Subnational Debt, Insolvency, and Market Development," World Bank - Economic Premise, The World Bank, issue 112, pages 1-7, April.
    9. Justin Yifu Lin & Doerte Doemeland, 2012. "Beyond Keynesianism: Global Infrastructure Investments In Times Of Crisis," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(03), pages 1-29.
    10. Peterson, George E. & Kaganova, Olga, 2010. "Integrating land financing into subnational fiscal management," Policy Research Working Paper Series 5409, The World Bank.
    11. Heidi Jane M. Smith, 2013. "Explaining Borrowing Patterns of Mexican Cities: The Case of the State of Guanajuato," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 75-87, April.
    12. Maurya, Nagendra Kumar, 2014. "Debt sustainability of state finances of Uttar Pradesh government," MPRA Paper 55692, University Library of Munich, Germany.
    13. Liu, Lili & Waibel, Michael, 2010. "Managing subnational credit and default risks," Policy Research Working Paper Series 5362, The World Bank.
    14. Ernesto del Castillo & René Cabral & Eduardo Saucedo, 2022. "The Sustainability of Mexican Municipal Public Debt," Sustainability, MDPI, vol. 14(11), pages 1-14, May.
    15. World Bank, 2013. "Impact and Implications of Recent and Potential Changes to Brazil's Subnational Fiscal Framework," World Bank Publications - Reports 20773, The World Bank Group.
    16. Juan S. Mora‐Sanguinetti & Rok Spruk, 2023. "Economic effects of recent experiences of federalism: Analysis of the regionalization process in Spain," Journal of Regional Science, Wiley Blackwell, vol. 63(1), pages 30-63, January.
    17. Liu, Lili & Pradelli, Juan, 2012. "Financing infrastructure and monitoring fiscal risks at the subnational level," Policy Research Working Paper Series 6069, The World Bank.
    18. V. V. S. Rama Krishna, 2014. "Consolidation Of Fiscal Front Of States In India," Working papers 2014-03-13, Voice of Research.
    19. Otaviano Canuto & Lili Liu, 2013. "Until Debt Do Us Part : Subnational Debt, Insolvency, and Markets," World Bank Publications - Books, The World Bank Group, number 12597.

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    More about this item

    Keywords

    Macroeconomics and Economic Growth - Subnational Economic Development Finance and Financial Sector Development - Debt Markets Private Sector Development - Emerging Markets Finance and Financial Sector Development - Access to Finance Finance and Financial Sector Development - Bankruptcy and Resolution of Financial Distress;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • F3 - International Economics - - International Finance
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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