Investing During the Recession: How County Governments Utilized Idle Cash

Abstract

This article examines the investing practices of North and South Carolina county governments during the recession. Unlike many local governments across the country, county governments in both states reported that there were indeed funds available for investing at any given time. Initial findings indicate that investors were concerned for safety and liquidity as the local government investment pool (LGIP) for both states along with certificates of deposit (CDs) were the preferred instruments. Regression models of the four most widely used instruments were analyzed. Findings indicate lower property tax collections and an external primary bank of business were associated with higher LGIP investment; whereas, a significant relationship was also found between those with less experience and official educational background other than accounting and an increase in money market funds and federal government securities.