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Annual Conference

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Investment Finance, Senior Fellows/Fellows

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May 2022

Biased Expectations and Credit Risk in the Municipal Bond Market

Tarun CHORDIA, Jinoug JEUNG, Abinash PATI
We show that the pricing of credit risk in the municipal bond market depends on the salience of its underlying cash-flow shocks. We find that public mass shootings raise borrowing costs of issuers in affected counties by an average of 6 (5.2) basis points in the secondary (primary) market. This incr...
Keywords: Biased Beliefs, Public Mass Shootings, Municipal Debt, Salience
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