Cooperative Municipal Lending in Sweden

38 Pages Posted: 6 Mar 2017 Last revised: 18 Oct 2018

See all articles by Jan Schnitzler

Jan Schnitzler

Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

Date Written: October 12, 2018


This paper studies a municipal credit agency, which is a specialized financial institution facilitating municipalities’ access to international capital markets. I document that gaining access to the agency’s credit facility decreases municipal borrowing costs compared to commercial bank loans. Built in the agency’s lending terms, I find support of a coinsurance mechanism across municipalities. Nevertheless, net gains of improved credit access must dominate since almost all municipalities have voluntarily joined. Finally, I could not detect evidence that a municipality’s participation in such a municipal credit agency adversely affects its fiscal discipline.

Keywords: municipal borrowing costs, municipal credit agency, local government funding agency

JEL Classification: H74, G12, G21

Suggested Citation

Schnitzler, Jan, Cooperative Municipal Lending in Sweden (October 12, 2018). Available at SSRN: or

Jan Schnitzler (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS

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