Opportunities for Collaboration and the Adoption of Local Government Investment Pools

This study examines the determinants of state adoption of local government investment pools (LGIPs) for commingling public funds for investment. It uses aggregate local government panel data from 41 states over a 40-year period and conditional fixed-effects logistic regression. The study finds that opportunities for collaboration, the extent of interlocal collaboration, local financial/economic conditions in a state, and proximate coterminous neighbors increase the likelihood that a state will adopt an LGIP. The finding that opportunities for collaboration contribute to the likelihood of LGIP adoption is an important evidence in support of the collaboration idea and extends the theory to interlocal cash management.