Municipal Bonds as an Investment Option among Indian Investors

Rapid urbanization coupled with increasing population throws up enormous challenges to local governments in India. One of the key concerns for the local governments is providing basic infrastructure facilities and quality services as well as improving living standards for the citizens. This situation requires the Urban Local Bodies (ULBs) to find innovative ideas for solving the infrastructure and service delivery problems and for creating a larger pool of funds for strengthening the ULBs. The current paper deals with the municipal bond as an innovative option of municipal finance. This study explores the satisfactoriness of an important measure taken by the local government i.e. introduction of municipal bonds to create a local funding source to improve the infrastructure facilities at the grass ischolar_main levels and analyses weather this initiative has been accepted well by the citizens/general public at large. Partial Least Square Structural Equation Model (PLS-SEM) was used to establish the reliability and validity of the scales and to test the hypotheses. The results documented investors’ perception to have greater impact in influencing municipal bond investment decision of Indian investors.