| This dissertation provides a historical analysis of the US experience in financing its water supply systems from the late 18th century until the Great Depression. The concluding chapter discusses implications for developing countries. The dissertation suggests that the increase in financial intermediation in the municipal bond market has been the major determinant for the level of public expenditure on water supply systems during the 19th century, while municipal reform measures helped sustain the market in the early 20th century. Key developments that promoted the municipal bond market included financial reforms during the late 18th century, open market improvements in the second half of the 19th century and municipal finance reform measures in the late 19th and early 20th century.;Evidence on who invested into municipal bonds corroborates a Gurley and Shaw view on the history of the market for primary securities. Periods with low municipal bond yields featured an increased level of financial intermediation. Periods of rising yields corresponded to a larger role of non-financial spending units. Moreover, the first three decades of the 20th century, particularly the 1920s, confirm the expected shift from bank to non-bank financial intermediaries in the market.;The last chapter derives a framework of analysis for the municipal bond market that takes into account the US experience and current challenges faced by developing countries, with separate case studies for South Africa and India. On the demand-side, the chapter identifies financial intermediaries and investors with suitable portfolio needs, issuer familiarity and confidence, the ability to trade securities on secondary markets and low credit and market risk as key characteristics of a sound municipal bond market. Supply-side features consist of improved capacity of municipalities to manage and support debt, low issuance costs, suitable regulatory and legal environments and credit enhancements. |
