Determinants of municipal loan spreads: empirical evidence from Switzerland

Fabio Sigrist (), Patrick Köchli () and Christoph Lengwiler ()
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Fabio Sigrist: Lucerne University of Applied Sciences
Patrick Köchli: Lucerne University of Applied Sciences
Christoph Lengwiler: Lucerne University of Applied Sciences

Financial Markets and Portfolio Management, 2018, vol. 32, issue 2, No 2, 143-166

Abstract: Abstract This is the first study to investigate the determinants of risk premia paid by Swiss municipalities in the German-speaking part of Switzerland. This paper draws on a unique data set for Swiss municipalities collected during four surveys. Our results show that fiscal soundness has almost no impact on risk premia and that the introduction of a no-bailout policy did not result in higher spreads. On the other hand, investors’ general risk aversion, as well as interest rate levels, are strongly related to spread levels.

Keywords: Regional public finances; Credit risk; Interest rates; Government debt; Bail out; Fiscal policy (search for similar items in EconPapers)
JEL-codes: E43 E62 H63 H74 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s11408-018-0307-6

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