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Methodological Aspects of Assessing the Creditworthiness of Municipalities as an Important Condition for Improving the Efficiency of Bank Lending Operations and Managing Municipal Borrowings

  • Nadezhda I. YashinaEmail author
  • Svetlana D. Makarova
  • Natalia N. Pronchatova-Rubtsova
  • Igor A. Makarov
  • Oksana I. Kashina
Conference paper
Part of the Lecture Notes in Networks and Systems book series (LNNS, volume 91)

Abstract

Relevance. At present, authorities of various levels actively use attracted financial resources as income sources. This is due to the transition to predominantly project financing, which involves co-financing from own and borrowed funds. This approach makes it imperative to have a mandatory assessment of the creditworthiness of borrowers, which are authorities at various levels. The purpose of the study is to develop methodical approaches to assessment of creditworthiness of territories taking into account specifics of their functioning.

Methods. This article proposes a methodology for assessing the creditworthiness of constituent entities of the Russian Federation and municipalities, based on the calculation of an integrated standardized indicator that allows you to compare condition of a certain territory with similar indicators by banks and interested authorities in the dynamics and at the current moment.

Results. The ranking of territories of Nizhny Novgorod region by creditworthiness level was carried out in order to assess the effectiveness of government bond issues in 2015–2017.

Discussion. Application of the methodology ensures transparency of assessment of the creditworthiness of borrower territories by banking organizations, which allows to minimize their risks on loans and expand the range of targeted funding sources. This approach is applied for the first time to credit rating of territories on the basis of integral indicators based on grouping on the basis of their minimization or maximization.

Conclusion. The methodology can be used by territorial authorities and banking management to improve the management of territorial borrowing and credit operations of banks.

Keywords

Creditworthiness of territories Budgetary stability Integral standardized indicator Efficiency of bank credit operations Management of municipal borrowings 

JEL Code

H66 H63 H11 

Notes

Acknowledgement

The research was carried out with the financial support of the Russian Foundation for Fundamental Research within the framework of the scientific project 18-010-00909 A.

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Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  • Nadezhda I. Yashina
    • 1
    Email author
  • Svetlana D. Makarova
    • 1
  • Natalia N. Pronchatova-Rubtsova
    • 1
  • Igor A. Makarov
    • 1
  • Oksana I. Kashina
    • 1
  1. 1.National Research Nizhny Novgorod State University N.I. LobachevskyNizhny NovgorodRussia

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