finance

Fiscal Secession (or How Local Special Assessments are Exacerbating Service Inequality)

July 3, 2018 // 0 Comments

Mathew D. McCubbins and Ellen C. Seljan | Local governments across the United States often find themselves needing to seek out new revenue sources, particularly in the face of state limitations on taxation.  Our research examines the usage of special assessments, a particularly popular, but understudied source of local revenues, in the state of California. Today, special assessments are commonly used to back local infrastructure projects and provide growing number of public services, from local fire and police protection to street maintenance and repair. Read More

Taking a Risk: Explaining the Use of Complex Debt Finance by the Chicago Public Schools

March 21, 2018 // 0 Comments

Amanda Kass, Martin J. Luby, and Rachel Weber | For most of the 20th century, the municipal securities market was a sleepy backwater where governments went to raise money for roads, bridges, and wastewater systems. Most cities financed their infrastructure with debt that relied on conservative or well-seasoned market structures.  At the end of the century, however, local governments entered a period of “entrepreneurial” finance as federal support for urban development declined. In the years leading up to the global financial crisis, many US governments began utilizing new bond structures and riskier financial instruments to, potentially, lower borrowing costs. Read More

Cashing In On Distress: The Expansion of Fringe Financial Institutions during the Great Recession

August 30, 2017 // 0 Comments

The finance industry plays an important role in shaping inequality. Private financial institutions determine, often in partnership with government, where to invest in housing, economic development, and infrastructure. These investments are often drastically uneven, fostering job growth and housing value appreciation in some areas and economic decline in others. One manifestation of this disparity is dramatic differences in access to services. While the affluent are able to build home equity and retirement accounts via access to “mainstream” financial services, the poor are disproportionately reliant on “alternative” or “fringe” services, such as check cashing outlets (CCOs), payday lending, and subprime mortgages.

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