Lessons learned from the birth, growth, and collapse of the municipal auction rate securities (MARS) market

.

Chapter 11 in State and Local Financial Instruments, 2021, pp 164-185 from Edward Elgar Publishing

Abstract: Over the last couple decades, state and local governments increased their reliance on financial management innovations to maximize the financial resources available to public managers. One such innovation, municipal auction rate securities (MARS), was increasingly used by governments up until the 2007/2008 global financial crisis for the purpose of improving the efficiency of their capital financings. However, the crisis in the sub-prime mortgage severely impacted the MARS market to the detriment of many state and local governments. This chapter examines the evolution and collapse of the MARS market as a means of highlighting what we have learned from the financial crisis as it relates to public financial management innovation. Based on this examination, the chapter concludes with some specific "lessons learned" for public financial managers to begin to establish a framework for better balancing the inherent tension between efficiency, risk-taking, and market stability associated with capital market financial innovations.

Keywords: Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/view/9781800370920.00017.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:19966_11

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().