Local Governments’ Adoption of Innovative Infrastructure Finance Tool: Evidence From Pennsylvania Municipalities

Laiyang Ke and Shiqin Liu

Public Finance Review, 2023, vol. 51, issue 4, 513-567

Abstract: State Infrastructure Banks (SIBs) are established to provide low-interest loans and credit enhancements to assist local governments in financing transportation projects. SIB loans, one of their core products, are low-cost and low-risk when compared to traditional capital finance tools. However, SIB loans are still rarely used by local communities. This study investigates the determinants of local government adoption of SIB loans among Pennsylvania municipalities from 2008 to 2015. Using limited dependent variable models, we discover that infrastructure demands, prior experiences, and neighboring adoptions are all positively associated with municipalities’ likelihood of applying for SIB loans as well as the intensity of loan usage, whereas fund balance reduces the probability of applying for SIB loans. We also find that as fund balance increases, the positive impact of infrastructure demands diminishes.

Keywords: state infrastructure bank; local transportation finance; policy innovation and diffusion; choice of capital financing tools (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:51:y:2023:i:4:p:513-567

DOI: 10.1177/10911421231153787

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