Managing For Results: How Higher Municipal Credit Ratings Increase Data Driven Management in Cities

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Data driven management is a powerful tool to help cities better address the needs of their residents. The current study examines the relationship between cities use of data as a management tool and municipal credit ratings, which research shows have important implications for the services that governments are able to deliver for their residents. While there has been extensive study of the fiscal aspects related to cities’ bond ratings, there has been little investigation of the relationship between municipal managerial factors and credit ratings. The current analysis takes a completely new approach by examining cities’ credit ratings and the specific approach of city management that prioritizes data to inform policy and operations. This analysis examines the management aspects of municipal credit by performing a linear regression on a unique dataset of city bond ratings, city fiscal information, and an independent rating of cities’ use of data-informed management. It finds that cities with higher credit ratings are more likely to have a data-driven approach to management, even when controlling for the fiscal and demographic factors identified in previous research. This newly established relationship between bond ratings and the use of data as a management tool has important implications for how credit ratings influence city management, how cities invest in data as a management tool, and for future research about the management aspects of city government.
municipal credit, data driven management, city finance, city management