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Do State Bond Banks Have Cost Advantages for Municipal Bond Issuance?


  • Mark D. Robbins,

  • Daehwan Kim

Mark D. Robbins may be reached at


State bond banks are created to extend management expertise, subsidies, and economies of scale to local government issuers, but bond banks incur issuance and program costs. This research examines whether state bond banks appear to achieve lower than average borrowing costs, once the costs of issuance are controlled for. We find that bond banks are associated with significantly lower borrowing costs for two of the three programs we examine, and determine that these savings are due largely to reductions in costs of issuance.