Market-based Financing Through Municipal Bond in India: Investor’s Checklist Using Structural Equation Modeling (SEM)

Q2 Business, Management and Accounting

Business Perspectives and Research Pub Date : 2023-04-29 DOI:10.1177/22785337231165843

Pali Gaur, Anurag Bhadur Singh

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Abstract

This paper aims to analyze the investor’s perspective toward municipal bonds and to inspect the success potential of municipal bonds in India from 2010 to 2020. The research’s conceptual model is drawn using PLS-SEM for the factors impacting investor decisions toward investment in bonds issued by urban local bodies in India. Results show that “credit rating,” “yields,” “tax benefit,” and “financial soundness” significantly affect the choice of investment in municipal bonds by retail investors. However, “transparency,” “liquidity,” and “investor awareness” are not found to be significant. Bond issuers can use the model to recognize the factors impacting investors’ prioritization for investments in municipal bonds, which can also help them target a bigger investor base. The study relies on subjective data provided by retail investors and may not be the clear-cut performance indicators. The limitation of the time frame for the study over 10 years will restrict the results specifically for that period. The importance of retail investors in developing countries’ municipal bond markets has been overlooked. The study’s key contribution will be to assist and empower new retail investors to have confidence in participating in this fixed-income financial instrument.

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印度市政债券市场化融资：使用结构方程模型（SEM）的投资者清单

本文旨在分析投资者对市政债券的看法，并考察2010-2020年印度市政债券的成功潜力。该研究的概念模型是使用PLS-SEM绘制的，用于分析影响投资者投资印度城市地方机构发行的债券的因素。结果表明，“信用评级”、“收益率”、“税收优惠”和“财务稳健性”显著影响散户投资者对市政债券的投资选择。然而，“透明度”、“流动性”和“投资者意识”并不重要。债券发行人可以使用该模型来识别影响投资者优先投资市政债券的因素，这也可以帮助他们瞄准更大的投资者基础。该研究依赖于散户投资者提供的主观数据，可能不是明确的业绩指标。研究时间框架超过10年的限制将限制该时期的具体结果。散户投资者在发展中国家市政债券市场的重要性一直被忽视。该研究的主要贡献将是帮助和增强新散户投资者对参与这一固定收益金融工具的信心。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Business Perspectives and Research Business, Management and Accounting-Business and International Management

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5.00

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0.00%

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期刊介绍： Business Perspectives and Research (BPR) aims to publish conceptual, empirical and applied research. The empirical research published in BPR focuses on testing, extending and building management theory. The goal is to expand and enhance the understanding of business and management through empirical investigation and theoretical analysis. BPR is also a platform for insightful and theoretically strong conceptual and review papers which would contribute to the body of knowledge. BPR seeks to advance the understanding of for-profit and not-for-profit organizations through empirical and conceptual work. It also publishes critical review of newly released books under Book Review section. The aim is to popularize and encourage discussion on ideas expressed in newly released books connected to management and allied disciplines. BPR also periodically publishes management cases grounded in theory, and communications in the form of research notes or comments from researchers and practitioners on published papers for critiquing and/or extending thinking on the area under consideration. The overarching aim of Business Perspectives and Research is to encourage original/innovative thinking through a scientific approach.