The effects of institutional typologies on the performance of state-sponsored local government investment pools

Abstract

This paper extends the risk-return argument of modern portfolio theory to the institutional typologies with which state-sponsored local government investment pools (LGIPs) operate. By using fixed-effects regression on monthly panel data from 18 LGIPs across seven years, the author found that institutional typologies with which LGIPs operate matter. An LGIP should be structured and managed based on its ability to mitigate risks. The paper contributes to increasing the accountability and fiscal governance over public money and promotes public funds investment laws in the US, UK and internationally.

Keywords:

• Local government investment pools
• institutional typologies
• modern portfolio theory
• performance
• treasury management

View correction statement:

Correction

Acknowledgement

I gratefully acknowledge the assistance of Professor Robert Bland, my Ph.D. dissertation chair at the University of North Texas, for his inputs and guidance in researching the LGIPs.

Additional information

Notes on contributors

Julius A. Nukpezah

Julius A. Nukpezah is an Assistant Professor of Public Policy and Administration in the Department of Political Science and Public Administration at Mississippi State University, USA.