CONSIDERATIONS ON THE ISSUANCE OF MUNICIPAL BONDS IN ROMANIA
The global financial crisis raised the price of the access to bank loans, a viable solution for financing is represented by issuing municipal bonds. This paper presents the current situation of municipal bons issues in Romania focusing on destination, on costs, on loans’ guarantees and their impact on indebtedness of local government. Local municipal bond market in Romania has a relatively short history, tailored after 2001, knowing that a considerable advance in recent years. The most common reasons for which public authorities are calling for loans are: either in need of cash or in need to balance the budget.
Romanian municipal bond market at Bucharest Stock Exchange: further investigations
The sub-sovereign finance importance for emerging and frontier markets is constantly growing since the beginning of 21st century. The change in regulations governing Romanian municipalities source of financing in 1998, allowed local governments to access alternative financing sources, mainly for medium and long term investment projects, through bond issuance. A secondary market for municipal bond trading was launched at Bucharest Stock Exchange at the end of November 2001 and the exchange also offers a platform for announcement and subscriptions of municipal bond public offerings. Thus, more than a decade later, the Romanian municipal bond market segment remains in a premature stage of development. The paper presents a comprehensive data set of Romanian municipal bond sector since it was launched in November 2001 until December 2013. The paper also reveals the level of Bucharest Stock Exchange (hereafter abbreviated as BVB) municipal bond segment underdevelopment after 12 years of trading. The findings highlight the factors influencing the trading decisions and might represent some suggested ides to be considered by their municipal bond issuers and the financial intermediaries assisting them. The investigations show that coupon and risk premium play only marginal roles in trading decisions hinting toward an unsophisticated market, dominated by a small number of institutional investors which rather treasure the scarce municipal bond offer. The absence of rating and the inappropriate correlation mainly between the risk premium and the economic potential of the issuer impair on further developments. The lack of sophistication displayed by the Romanian financial system, which also does not provide credit enhancements dedicated to local government, along with a thin domestic investor base are factors fencing, at least for the moment, the possibilities to overcome the rating problem and the offer diversity problem.
Strategy and Manipulation in Medieval Elections
There are many goals in developing electoral protocols, including a desire for a system which is transparent, in that it is clear what the rule or procedure to follow is; nonmanipulable, in that it is not in a person’s best interest to misrepresent their preferences; honest, in the sense that it elects the ‘right’ candidate; and not open to strategizing, i.e., bribery or collusion. However, these desiderata are in tension with each other: Often, transparent electoral procedures are the least strategy resistant, and many honest procedures encourage manipulation. Thus a balance between these different goals must be sought. In modern times, since the seminal result on vote manipulation, the Gibbard-Satterthwaite Theorem [5, 6], much attention has been devoted to developing voting rules where manipulation is never in the best interest of the voters [4] or which are computationally too complex for the average bounded agent to be able to manipulate [1]. This focus on computational aspects of electoral methods is one of the hallmarks of modern studies on voting. But pursuit of these goals is not restricted to modern times: Those participating in elections in the Middle Ages also sought transparency, non-manipulability, honesty, and strategyproofness in so far as these properties can be consistently expressed in a single procedure. However, given the lack of computational sophistication in the Middle Ages, alternate approaches were needed in order to promote honesty, discourage strategizing, etc. These approaches can be classified as either external (constraints introduced outside of the electoral procedure, such as incentives for coming to consensus quickly) or internal (constraints introduced within the electoral procedure, such as voting rules which cannot be manipulated without adverse effects, or which are too difficult for the average bounded agent to manipulate). Surveying examples of both approaches in the context of medieval ecclesiastical and secular elections provides an interesting comparison to modern electoral procedures. Elections in the Middle Ages were used for the same reasons that they are today: To select suitable candidate(s) for a particular office, duty, or obligation. However, it is important to note that the term electio was used in the Middle Ages in a broader sense than our modern ‘election’. Its primary sense was ‘selection’ or ‘choice’, and only secondarily ‘election’ in the modern sense. Thus, many records which purportedly discuss elections are not discussing elections of the type which interests us. We can identify four categories of medieval electoral processes: (1) Election by an external authority having no direct interest in the election; (2) Indirect election, where electors name other electors who then select or elect the officials; (3) Election by lot; and (4) Election by ballot. Elections of the first and third types are generally computationally uninteresting; the first type corresponds to dictatorial voting rules, and the third type collapses to probability theory. In general, interesting voting methods are found only in the fourth type, election by ballot, though they can also occur in indirect election.