Local government borrowing in the financial market: The benefits of issuing municipal bonds

The way of local governments financing is regulated by positive legal regulations of Republic of Serbia. One of the ways of financing particular interests of cities and municipalities is borrowing in the financial market. These subjects are left to analyze the situation and developments in the financial market and to choose one of two models of indebtedness - a credit borrowing from banks or issuing of municipal bonds as securities. The research subject of this work concerns the potential benefits of borrowing through the issuance of these securities. The aim of the research is to define all the potential benefits that cities and municipalities in Republic of Serbia can realize if they opt for this form of borrowing. The paper also presents scientifically elaborated positive effects of this form of borrowing, which are based on relevant both national and international data contained in various scientific publications. In addition, the authors of this paper have presented some of their arguments in favor of this type of borrowing being based on an analytical observation of the research subject.