Critical Determinants of Michigan Municipal Bond Ratings
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In this study we examined Standard & Poors bond ratings for a sample of 36 cities and townships in Michigan in 2013. We were interested in determining the critical factors that play a role in these bond ratings. A secondary question was whether the longstanding financial difficulties and reputation for high crime levels City of Detroit might adversely affect the bond rating of neighboring municipalities. We were also interested in determining whether a large minority population could adversely affect bond ratings, holding other variables constant. We found that Revenue per Capita (RPC), and Median Household Income (MHI) were significant determinants of bond rating. Additionally we found that geographic proximity to Detroit and minority population also affect bond ratings for Michigan municipalities.
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