Insured Bond Pricing in the Biggest Municipal Bankruptcy in History: The Case of Detroit

Posted: 20 Jul 2016

See all articles by Austin Murphy

Austin Murphy

Oakland University - School of Business Administration

Date Written: June 27, 2016

Abstract

This case study finds evidence that stricter state interference in the financial affairs of a distressed government (that increases the likely payoff to its own creditors) raises the default risk of nearby municipalities. Economically related municipalities are found to be adversely impacted by a deterioration in the economic situation of financially associated local governments caused by actions interfering with the operation of the distressed municipality for the benefit of its creditors.

Suggested Citation

Murphy, J. Austin, Insured Bond Pricing in the Biggest Municipal Bankruptcy in History: The Case of Detroit (June 27, 2016). Available at SSRN: https://ssrn.com/abstract=2801320 or http://dx.doi.org/10.2139/ssrn.2801320

J. Austin Murphy (Contact Author)

Oakland University - School of Business Administration ( email )

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