The Use and Abuse of Special-Purpose Entities in Public Finance

38 Pages Posted: 14 Sep 2011 Last revised: 28 Dec 2014

Date Written: December 17, 2012


States increasingly are raising financing indirectly through special-purpose entities (SPEs), variously referred to as authorities, special authorities, or public authorities. Notwithstanding their long history and increasingly widespread use, relatively little is known or has been written about these entities. This article examines state SPEs and their functions, comparing them to SPEs used in corporate finance. States, even more than corporations, use these entities to reduce financial transparency and avoid public scrutiny, seriously threatening the integrity of public finance. The article analyzes how regulation could be designed in order to control that threat while maintaining the legitimate financing benefits provided by these state entities. .

Keywords: special purpose entities, SPEs, state government debt financing, public finance

Suggested Citation

Schwarcz, Steven L., The Use and Abuse of Special-Purpose Entities in Public Finance (December 17, 2012). Minnesota Law Review, Vol. 97, No. 2, 2012, Available at SSRN: or

Steven L. Schwarcz (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7060 (Phone)
919-613-7231 (Fax)

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