Abstract
This study analyzed data for municipal revenue bond issues sold in 1979 to identify the impact of commercial bank eligibility on the interest cost to the issuing state or local government. The empirical evidence developed suggests that commercial bank eligibility had no statistically significant effect on the interest cost of municipal revenue bonds sold competitively or by neogotiation, when other factors explaining the interest cost are taken into account properly. Nor did bank eligibility increase the power of the model to explain the interest cost of the bono issues. The theoretical and empirical weaknesses of some earlier studies that report opposite findings are analyzed.
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