Accounting for Financial Health: Different Local Governments’ Choices in Different Governance Settings

2011 ◽  
Author(s):  
Emanuele Padovani ◽  
Rebecca Levy Orelli ◽  
Francesca Manes Rossi
Keyword(s):  
Local Governments ◽  
Financial Health

scholarly journals Municipal finance analysis: The case study of Gujarat (India)

2021 ◽  
Vol 9 (1) ◽  
pp. 70-87
Author(s):  
Forum Dave
Keyword(s):  
Local Governments ◽  
Fiscal Federalism ◽  
Constitutional Amendment ◽  
Municipal Finance ◽  
Financial Health ◽  
Social Infrastructure ◽  
Economic Activities ◽  
Governance System

This paper theoretically underpins the idea of greater involvement of local governments in the overall development of India explained through the theory of Fiscal Federalism. The theory outlines the dynamics of decentralization of power and functions through a multi-layered governance system leading to a new structure and added functions, finance, and accountability to local government. The paper also provides an overview of the increasing role of urban local governments in India and investigates whether the Urban Local Bodies (ULBs) of Gujarat – a state in India, are efficient to perform the functions and responsibilities assigned to them by the 74th Constitutional Amendment Act (CAA). It scrutinizes the financial health of local governments in the urban regions of India. The results based on the application of MANOVA indicate that the 74th CAA empowered ULBs with a strong economic base that these ULBs are capable of mobilizing their own resources. This means that smaller municipalities must develop and convergence must be supported by a proportionate level of grants. This will ensure that with the development of social infrastructure, economic activities will increase, and, as a result, the conversion will occur.

scholarly journals Corrective Action Plans for Local Governments as Their Financial Health Barometers?

2018 ◽  
Vol 26 (4) ◽  
pp. 25-35
Author(s):  
Iwona Kowalska
Keyword(s):  
Local Government ◽  
Local Governments ◽  
Fold Increase ◽  
Corrective Action ◽  
Action Plans ◽  
Financial Health ◽  
The Public ◽  
Financial Position ◽  
Alternative Approach ◽  
Alternative Solutions

The implementation of corrective action plans in local government units (LGUs) takes place in the situation when they are unable to draw up a Multiannual Financial Forecast or the budget complying with the principles set out in Article 242-244 of the Public Finance Act (UFP). In the years 2012–2016, there was a six-fold increase in the number of LGUs which were obliged to implement these plans. Therefore, the aim of this paper is to assess their suitability as an actual barometer of the financial standing of local government units and propose an alternative solutions. The conducted analysis shows that the adopted legislative solutions regulating the implementation of corrective action plans are inconsistent and their effectiveness is not fully satisfactory. The paper suggests changes in current regulations and proposes alternative approach to the assessment of the financial position of local government units.

Budgetary solvency of Italian local governments: an assessment

2019 ◽  
Vol 32 (2) ◽  
pp. 122-141 ◽  
Author(s):  
Marco Bisogno ◽  
Beatriz Cuadrado-Ballesteros ◽  
Serena Santis ◽  
Francesca Citro
Keyword(s):  
Financial Management ◽  
Local Governments ◽  
Public Services ◽  
Financial Health ◽  
Content Type ◽  
Financial Autonomy ◽  
Financial Condition ◽  
Public Financial Management ◽  
External Sources ◽  
Fresh Insight

PurposeThe purpose of this paper is to investigate budgetary solvency (BS) as a part of the financial condition of local governments (LGs), considering that the growing demand for public services is primarily affecting this variable.Design/methodology/approachThe study investigates a sample of 132 Italian LGs with more than 50,000 inhabitants for the period 2005–2014. The authors obtain a set of indicators as proxies of BS, which serve as the dependent variable of a regression model aimed at testing several independent variables which the authors are interested in, namely, financial autonomy, current equilibrium, level of indebtedness and investments.FindingsBS, as well as its three indicators—sustainability, flexibility and vulnerability—are positively related to financial autonomy and current equilibrium and negatively related to the level of indebtedness and investments.Practical implicationsTo cover citizens’ demands for public services guaranteeing sound financial management, policymakers are advised to control both the balance between current revenue and expenses and the level of indebtedness while preserving financial autonomy from external sources.Originality/valueThis study adds fresh insight to the literature on financial health, emphasising the relevance of public financial management.

Explaining the Relation Between Efficiency and Financial Condition

2018 ◽  
pp. 149-178
Author(s):  
Marco Bisogno ◽  
Beatriz Cuadrado-Ballesteros
Keyword(s):  
Local Governments ◽  
Capital Expenditures ◽  
Financial Health ◽  
Financial Condition ◽  
Positive Effect

There is a risk of presupposing that enhancing efficiency will simply improve financial health in local governments. However, there are several reasons to think that the healthy governments could be the least efficient ones. This chapter aims to contribute to this discussion by using a sample of the 132 largest Italian local governments during the period 2005-2014. The results show that the taken-for-granted positive effect of efficiency on financial condition is observable only when efficiency refers to current expenditures, but such a positive effect has not been observed in the case of capital expenditures.

Financial Conditions, Financial Sustainability, and Intergenerational Equity in Local Governments

2018 ◽  
pp. 101-124 ◽  
Author(s):  
Francesca Citro ◽  
Giovanna Lucianelli ◽  
Serena Santis
Keyword(s):  
Quality Of Life ◽  
Local Governments ◽  
Intergenerational Equity ◽  
Financial Sustainability ◽  
Financial Health ◽  
Financial Conditions ◽  
Key Concepts ◽  
Narrative Literature ◽  
Narrative Literature Review

The chapter offers a necessary summary of the key concepts of financial conditions, financial sustainability, and intergenerational equity in local governments through a close examination of different approaches. Focusing on a narrative literature review approach, the chapter has two main aims: first, to provide evidence on how to define the terms of theoretical and practical underpinnings to represent financial conditions in local governments in order to clarify the distinctive feature of financial conditions with a particular focus on the specific measures for budgetary solvency: sustainability, flexibility, and vulnerability; second, taking into account that the link between financial sustainability and intergenerational equity seems to be under-investigated, the authors discuss what the conditions for achieving financial health are while ensuring intergenerational equity with reference to the level of citizens' quality of life.

Does financial health influence the re-election of local governments?

2019 ◽  
Vol 31 (3) ◽  
pp. 345-363 ◽  
Author(s):  
Beatriz Cuadrado-Ballesteros ◽  
Serena Santis ◽  
Francesca Citro ◽  
Marco Bisogno
Keyword(s):  
Financial Management ◽  
Local Governments ◽  
Service Level ◽  
Financial Health ◽  
Content Type ◽  
Public Financial Management ◽  
The Social ◽  
Local Politicians ◽  
The Government ◽  
Fresh Insight

Purpose The purpose of this paper is to investigate the possible influence of financial health of local governments (LGs) on the re-election of politicians. Design/methodology/approach The study investigates a sample of 129 Italian LGs with more than 50,000 inhabitants for the period 2008–2014, resulting in 903 observations. A regression model has been implemented, where the dependent variable refers to the probability of re-election, and different dimensions of financial health are the independent variables. Findings Budgetary and service-level solvency influence positively the probability of re-election of the major, while the ability of the government to generate liquidity to pay its short-term debts is not statistically relevant. Moreover, the sustainability dimension of budgetary solvency is more relevant than the flexibility and vulnerability dimensions. Practical implications To be re-elected, local politicians are advised to pay attention to and preserve the social welfare of citizens with the available resources. Originality/value This study adds fresh insight to the literature on financial health, emphasising the relevance of public financial management in the re-election of local politicians.

scholarly journals How to Improve the Financial Conditions of Local Governments in a Period of Crisis: An Explanatory Case Study

2017 ◽  
Vol 13 (1) ◽  
pp. 53 ◽  
Author(s):  
Giovanna Lucianelli ◽  
Francesca Citro ◽  
Serena Santis ◽  
Alfredo Ettore Tranfaglia ◽  
Andrea Mazzillo
Keyword(s):  
Financial Distress ◽  
Local Governments ◽  
Management Practices ◽  
Black Box ◽  
Income Generation ◽  
Financial Health ◽  
Financial Situation ◽  
Financial Conditions ◽  
Strategic Implementation

The context of austerity and crisis in the local governments has focused on looking for a solution to avoid the distress while also improving financial health. Therefore, a system to monitor the financial situation of local authorities is needed in order to understand what the governments’ proceeding to manage the crisis are. This paper aims to analyse the financial distress in the municipality of Rome to evaluate the processes that occur inside the “black box” of the organizational, institutional and strategic implementation of the reorganization practices and routines, also highlighting what are the indicators of the financial conditions that fall into either a positive or negative area so as to implement adequate planning. The analysis is conducted through an explanatory case study to understand and to explain the reasons for management practices in a condition of financial distress. The main finding shows that the case of Rome represents a good example of the financial resilience through a combination of capacities and reactions such as management of slack resources and income generation.

Transparency as a Determinant of Local Financial Condition

2020 ◽  
pp. 1972-1995
Author(s):  
Beatriz Cuadrado-Ballesteros ◽  
Noemi Mordán ◽  
José Valeriano Frías-Aceituno
Keyword(s):  
Local Governments ◽  
Financial Health ◽  
Financial Condition

This study is an attempt to understand the importance of the broadcasting of information about the financial health of local governments. For this, a sample comprising the 110 most important Spanish cities has been used, for the period 2008–2010. Results show that transparency about local governments' actions improves their financial condition. If citizens know this information, the uncertainty over how the resources are used by leaders decreases, encouraging them to carry out efficient governance.

The geography of financial condition in the Mexico City metropolitan area

2021 ◽  
pp. 026909422110604
Author(s):  
Alejandra Trejo-Nieto
Keyword(s):  
Mexico City ◽  
Metropolitan Area ◽  
Local Governments ◽  
Inclusive Development ◽  
Financial Health ◽  
Political Factors ◽  
Financial Capacity ◽  
Financial Condition ◽  
Policy Concern ◽  
Administrative Units

There has been academic and policy concern about the financial capacity of administratively fragmented metropolitan areas to implement inclusive development measures and provide public services. Metropolitan public financing is problematic because there is a geographical mismatch between extended functional urban regions and administrative units. While local governments are responsible for implementing policies, spending, and raising revenues, financial capacity tends to differ across jurisdictions in response to economic, social and political factors, resulting in manifold disparities. Such variations can be particularly acute depending on the complexity and size of the metropolitan area, and can lead to major spatial disparities in the life standards of residents. This paper focuses on the local financial condition in Mexico City Metropolitan Area, which is often used to exemplify a fragmented metropolitan area. Official statistics from 1989 to 2018 are used to identify major intra-metropolitan variations in the financial condition of local governments. A novel methodology is used to classify municipalities according to their financial health, and discriminant analysis is used to explore the factors shaping the geography of financial performance. The economic and demographic size of municipalities appear to play a significant role.

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