Municipal Bonds as a Way of Financing Local Governments in the Republic of Serbia and Countries of the Region

Abstract

In practice, it has been shown that most local governments decide on traditional sources of funding, which in recent decades due to the accelerated process of urbanization are not sufficient. Insufficient development of the capital market prevents local self-governments on the territory of Serbia from choosing other types of financing, such as the issue of municipal bonds. The aim of this paper is to analyze the benefits that local governments reap when issuing municipal bonds. The paper wishes to point out the importance of choosing this type of financing of capital projects of importance for the local population. The authors believe that the choice of adequate funding can significantly affect the implementation of the strategy of sustainable development of a local government. During the preparation of the paper, the method of content analysis, comparative method and synthetic method were used, which enabled the conclusion. Based on empirical research, the benefits of issuing municipal bonds have been clearly established. If we take into account the number of cities that issued the mentioned bonds in Serbia, we can conclude that the market of municipal bonds in Serbia is less developed than is the case with the markets of countries in the region.