Four Decades of Municipal Bailouts in Germany

Person, Christian; Geißler, René

doi:10.1007/978-3-030-67466-3_13

Cited by 2 publications

(4 citation statements)

References 10 publications

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“…These results are highly decisive with regard to the recent debt situation, as several NRW LGs face severe financial problems. Despite fiscal equalization systems and strict budgetary frameworks, many cities had and still have to face fiscal problems (Person and Geissler, 2021), due to structural changes and inadequate funding. Accordingly, higher debt levels may negatively impact FS and therefore endanger the provision of public services by LGs.…”

Section: Empirical Results and Discussionmentioning

confidence: 99%

“…NRW LGs participating in the bailout ‘pact for strengthening cities’ significantly raised their assessment rates, without strengthening their equity or reducing older debts (Holtkamp and Garske, 2020). In the aftermath of the financial crises, the municipal bailout programme was implemented in 2011 and foresees annual grants with the intention of achieving a balanced budget (Person and Geissler, 2021). Raising assessment rates additionally influences the fiscal attractiveness of locations and LGs might enter into a fiscal competition.…”

Section: Discussionmentioning

confidence: 99%

“…Additionally, 60% of the nationwide municipal cash credit stock is concentrated in NRW (Boettcher et al, 2021). NRW has a long history of bailouts, starting in the 1980s to support old industrial cities suffering from socio-economic decline going over to the global financial crises with the pact for strengthening cities in 2011 (Person and Geissler, 2021). In 2018, as the cash credits still remained on a high level in NRW, the federal state started a discussion on a major bailout of cash old debts, which was postponed due to the large amount of credits and is still discussed (Person and Geissler, 2021).…”

Section: German Local Governmentmentioning

confidence: 99%

“…Each German state implemented a fiscal equalization system in order to ensure a need-based financial basis (Person and Geissler, 2021), which consists of dedicated (from federal states and federal government) and general allocations (from federal states only) (Seuberlich, 2017). The central element of the fiscal equalization system is the rate support grants as part of the general allocations, which consider the financial need in relation to the financial power of an LG (Seuberlich, 2017).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Drivers and risk factors of German local financial sustainability focusing on adjusted income

Frintrup

Hilgers

2023

International Review of Administrative Sciences

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Analysing the financial sustainability of local governments is of great interest, as they offer a wide range of services and are close to citizens. Various organizations have pointed out the need to analyse the determinants of financial sustainability, and recent research has focused on several European countries, using adjusted income as a dependent variable. To fill the research gap in the context of German local governments, we conduct an empirical analysis with 5 years of data from 363 local governments from North Rhine–Westphalia to analyse the impact of socio-demographic and financial-economic factors on financial sustainability, focusing on the adjusted income. Our results indicate that financial sustainability is influenced by factors on which the local governments have no impact or at least only a limited impact. Specifically, the debt level and the level of population are identified as risk factors, whereas own taxes, rate support grants and the net cash surplus serve as drivers of financial sustainability. Points for practitioners Understanding the determinants of financial sustainability is important for politicians and public managers in order to improve their risk management and decision-making processes and to prevent future sustainability problems. This paper identifies several socio-demographic and financial-economic determinants of FS, on which the local governments have only a limited impact. Considering that the financial sustainability of German local governments in North Rhine–Westphalia largely depends on external factors might be of great interest for policymakers with regard to future financial crises.

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Section: Empirical Results and Discussionmentioning

confidence: 99%

Section: Discussionmentioning

confidence: 99%

Section: German Local Governmentmentioning

confidence: 99%

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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Drivers and risk factors of German local financial sustainability focusing on adjusted income

Frintrup

Hilgers

2023

International Review of Administrative Sciences

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Éléments moteurs et facteurs de risque de la viabilité financière locale allemande avec le revenu ajusté en point de mire

Frintrup,

Hilgers

2024

Revue Internationale Des Sciences Administratives

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Analyser la viabilité financière des gouvernements locaux présente un grand intérêt, car ils offrent un large éventail de services et sont proches des citoyens. Diverses organisations ont souligné la nécessité d’analyser les déterminants de la viabilité financière, et des recherches récentes se sont concentrées sur plusieurs pays européens, en utilisant le revenu ajusté comme variable dépendante. Pour combler le manque de recherche dans le contexte des gouvernements locaux allemands, nous menons une analyse empirique basée sur 5 années de données issues de 363 gouvernements locaux de Rhénanie-du-Nord-Westphalie pour analyser l’impact des facteurs socio-démographiques et financiers-économiques sur la viabilité financière, en nous concentrant sur le revenu ajusté. Nos résultats indiquent que la viabilité financière est influencée par des facteurs sur lesquels les gouvernements locaux n’ont aucun impact ou seulement un impact limité. Plus précisément, le niveau d’endettement et le niveau de population sont identifiés comme des facteurs de risque, tandis que les impôts propres, les dotations complémentaires des collectivités locales et l’excédent de trésorerie net favorisent la viabilité financière. Remarques à l’intention des praticiens Il est important pour les politiciens et les gestionnaires publics de comprendre les déterminants de la viabilité financière afin d’améliorer leurs processus de gestion des risques et de prise de décisions et de prévenir les futurs problèmes de viabilité. Ce document identifie plusieurs déterminants socio-démographiques et financiers-économiques de la viabilité financière, sur lesquels les collectivités locales n’ont qu’un impact limité. Considérant que la viabilité financière des collectivités locales allemandes en Rhénanie-du-Nord-Westphalie dépend en grande partie de facteurs externes, les décideurs politiques pourraient être très intéressés eu égard aux crises financières à venir.

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Four Decades of Municipal Bailouts in Germany

Cited by 2 publications

References 10 publications

Drivers and risk factors of German local financial sustainability focusing on adjusted income

Drivers and risk factors of German local financial sustainability focusing on adjusted income

Éléments moteurs et facteurs de risque de la viabilité financière locale allemande avec le revenu ajusté en point de mire

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