Issuance of municipal bonds through capital markets as financial revenue for regional development

Purpose: This paper aims to identify and analyze the potential of regional sources, such as regional revenue or fund-lending institutions either coming from foreign or local investors to develop the regions in the state of Indonesia. Approach/Methodology/Design: This paper uses a normative research method that refers to legislation and regulations. Findings: The capital markets are expected to be the key for the regional development. This paper also describes how regional governments could raise funds through capital market instruments which are, municipal bonds and its derivatives. Municipal bond is a regional loan offered to the public through the Initial Public Offering mechanism in the Capital Markets. Practical Implications: As a consequence, the regional governments in Indonesia could minimize their dependence from the Central governments by issuing municipal bonds. This kind of borrowing could also support the Central Government to develop the national economy. Originality/value: This paper mainly explore another prospective source of funding for regional government which proved to absorb a sufficient amount of capital by using municipal bonds financing.peer-reviewe