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Measuring the financial sustainability and its influential factors in local governments

Author

Listed:
  • Andrés Navarro-Galera
  • Manuel Pedro Rodríguez-Bolívar
  • Laura Alcaide-Muñoz
  • María Deseada López-Subires

Abstract

The economic crisis has led international organizations and previous research to point out the need for measuring and controlling financial sustainability in governments. Based on the main international pronouncements, this article seeks to contribute to the measurement and management of the financial sustainability, analysing the income statement evolution and identifying its influential factors. An empirical study of Spanish municipalities is then undertaken to test the relationship between the measure of the financial sustainability and three dimensions proposed by International Federation of Accountants (IFAC) (revenues, debt and services). Our findings indicate that the income statement is a good approach for the financial sustainability assessment, because it reveals relevant information about its three dimensions, allowing to identify the specific factors which could provoke sustainability problems on public services.

Suggested Citation

  • Andrés Navarro-Galera & Manuel Pedro Rodríguez-Bolívar & Laura Alcaide-Muñoz & María Deseada López-Subires, 2016. "Measuring the financial sustainability and its influential factors in local governments," Applied Economics, Taylor & Francis Journals, vol. 48(41), pages 3961-3975, September.
    • Handle: RePEc:taf:applec:v:48:y:2016:i:41:p:3961-3975
    DOI: 10.1080/00036846.2016.1148260
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    Citations

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    Cited by:

    1. Dionisio Buendía-Carrillo & Juan Lara-Rubio & Andrés Navarro-Galera & María Elena Gómez-Miranda, 2020. "The impact of population size on the risk of local government default," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(5), pages 1264-1286, October.
    2. Vicente Pina & Patricia Bachiller & Lara Ripoll, 2020. "Testing the Reliability of Financial Sustainability. The Case of Spanish Local Governments," Sustainability, MDPI, vol. 12(17), pages 1-22, August.
    3. María Deseada López Subires & Laura Alcaide Muñoz & Andrés Navarro Galera & Manuel Pedro Rodríguez Bolívar, 2019. "The Influence of Socio-Demographic Factors on Financial Sustainability of Public Services: A Comparative Analysis in Regional Governments and Local Governments," Sustainability, MDPI, vol. 11(21), pages 1-18, October.
    4. Serena Santis & Alberto Incollingo & Francesca Citro, 2021. "How to Manage the Components of Financial Sustainability in Local Governments," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 11(2), pages 111-111, December.
    5. Vlad-Cosmin Bulai & Alexandra Horobeț & Lucian Belascu, 2019. "Improving Local Governments’ Financial Sustainability by Using Open Government Data: An Application of High-Granularity Estimates of Personal Income Levels in Romania," Sustainability, MDPI, vol. 11(20), pages 1-11, October.
    6. Krzysztof Surowka, 2021. "Role of EU Funds in Financing the Activity of a Local Government in Poland from 2011 to 2020," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 1096-1109.
    7. Beata Guziejewska & Katarzyna Walerysiak-Grzechowska, . "A Local Government Revenue System under Macroeconomic Pressure: The Case of Poland," Prague Economic Papers, University of Economics, Prague, vol. 0, pages 1-23.
    8. Syed Inaam Ullah Shah, Amina Bashir, Muhammad Ishaq Biland, 2020. "Psychological Determinants of Household Financial Sustainability: The Perspective of Employees in Manufacturing Sector of Malaysia," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 5(2), pages 126-136, October.
    9. Alinska Agnieszka & Kosztowniak Aneta & Wajda Marcin, 2021. "Liabilities of Local Government Units in Poland: Identification and Analysis of Diversification Factors," European Research Studies Journal, European Research Studies Journal, vol. 0(2B), pages 113-134.
    10. Beata Guziejewska & Katarzyna Walerysiak-Grzechowska, 2020. "A Local Government Revenue System under Macroeconomic Pressure - The Case of Poland," Prague Economic Papers, Prague University of Economics and Business, vol. 2020(1), pages 29-52.
    11. Benito, Bernardino & Guillamón, María-Dolores & Ríos, Ana-María & Bastida, Francisco, 2018. "Can salaries and re-election prevent political corruption? An empirical evidence," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 21(1), pages 19-27.

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