Municipal financial vulnerability in pandemic crises: a framework for analysis

Padovani, Emanuele; Iacuzzi, Silvia; Jorge, Susana; Pimentel, Liliana

doi:10.1108/jpbafm-07-2020-0129

Cited by 20 publications

(23 citation statements)

References 37 publications

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“…Second, future research could look at the role financial indicators can play in facilitating auditing as well as assessing the impact of financial shocks. Future research could look more closely at whether and how a set of financial ratios calculated based on information from financial statement could allow auditors to get an indication of LG's financial risk (Cohen et al, 2017) and, hence, to support politicians and managers in promptly detecting financial distress and vulnerability (Padovani et al, 2021). Similarly, financial ratios could help appreciate in how far LGs have managed to address audit findings (Hruza, 2015) and in how far crisis countermeasures have supported LG's resilience (Heged} us and Lentner, 2020).…”

Section: Discussion: Future Developments and Researchmentioning

confidence: 99%

An appraisal of financial indicators for local government: a structured literature review

Iacuzzi

2021

JPBAFM

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PurposeConsidering the increased financial responsibility of local government (LG), the impact of global crises and the growing adoption of accrual accounting and common standards such as IPSAS, this work focuses on financial indicators for LGs. It explores whether the literature on financial indicators has grown, investigates whether there is any consensus on which indicators to use for assessing LG's financial condition, develops a critical reading of the literature and offers suggestions for future research and policy agendas.Design/methodology/approachA structured literature review was carried out for publications in English about LG financial indicators.FindingsResults reveal that the number of publications dealing with financial indicators has increased over the past ten years. However, rather than focusing on a set of common indicators, the literature reports a plethora of different ones used for four main purposes: transparency and accountability compliance, performance monitoring and benchmarking, assessing LG's financial health and helping deal with exogenous crises. There is no evidence of convergence towards a common set of indicators, even though liquidity and solvency are the most popular dimensions explored by scholars.Research limitations/implicationsFindings highlight the challenges in converging on financial indicators, yet no claim can be made beyond the reviewed material.Practical implicationsResults provide legislators, public managers, investors and rating agencies with insights about trends in financial indicators, their benefits and limitations.Originality/valueThe article focuses on a less popular aspect of recent financial management reforms for local administration, that is the growing fragmentation in LG indicators, accentuated by the need for common assessment tools during unprecedented widespread crises across countries and sectors.

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Section: Discussion: Future Developments and Researchmentioning

confidence: 99%

An appraisal of financial indicators for local government: a structured literature review

Iacuzzi

2021

JPBAFM

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“…Financial stability depends on the vulnerability and flexibility of local budgets which are important components of their financial condition and are studied using various methods of analysis by many scholars: Zafra-Gómez, et al (2009), Cabaleiro, et al (2013), Padovani, et al (2021) and other.…”

Section: Literature Reviewmentioning

confidence: 99%

“…On 23), Chernihiv region - (24), Kyiv (city) - (25). In turn the designation of clusters using the symbols C1-C5 as well as color separation is due to software features.…”

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confidence: 99%

Assessment of Financial Sustainability of Local Budgets in the Budget Management System Using Kohonen Maps

Lysiak¹,

Качула²,

Kushnir³

et al. 2021

ujaf

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Systematic assessment of the financial stability of local budgets is important for timely detection of budget imbalances and identification of their causes, thus helping to make informed management decisions of current and strategic nature on the development of territories, quality local public services and improving welfare. The article proposes the use of Kohonen maps to determine the financial stability of local budgets. The main advantages of the practical use of Kohonen maps for this purpose compared to such common assessment methods as integrated and matrix are the simplification of the process of assessing the financial stability of local budgets and at the same time visualization of the results for public presentation. On Ukraine's example local budgets were grouped according to the parameters of their financial stability with the construction of Kohonen maps based on the SOM-Ward algorithm. It allowed determining the financial condition of local budgets of Ukraine during 2017-2020 and accordingly the type of their financial stability. Taking into account changes in the financial stability of local budgets over time is important when adjusting fiscal policy. The idea is that simplifying the process of assessing the financial stability of local budgets is an important condition for its active practical application and at the same time will allow visualizing information for the public about local budgets which will promote transparency in budget management and increase trust in the formation of priorities of fiscal policy at the local level.

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“…Similarly, an IMC entity's financial sustainability is considered more vulnerable since its revenues largely depend on other governments' transfers (Padovani et al, 2021). Certain supra-national institutions have claimed that the financing of IMC is a key factor in its success (Council of Europe, 2010).…”

Section: Literature Reviewmentioning

confidence: 99%

Does municipal fiscal distress hinder inter-municipal cooperation?

Bocchino

Padovani

2021

JPBAFM

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PurposeInter-municipal cooperation (IMC) has been increasingly adopted worldwide to tackle issues of size and cost reduction in the provision of public services. Although the determinants of cooperation among municipalities have been widely investigated in the prior literature, little is known about the link between a municipality's financial health and that of the supra-municipal entity formed under IMC. The purpose of this study is to fill this research gap by analyzing the case of municipal unions (MUs) in Italy.Design/methodology/approachA quantitative approach has been used, applying OLS and quantile regression on financial information and other variables of municipalities and their MUs.FindingsThe study finds that the most important condition of operation for IMC, that is, financial sustainability, is directly linked to the financial health of member municipalities and the functional integration reached with the supra-municipal entity.Originality/valueThe study analyses all MUs in Italy, focusing on the factors affecting their financial sustainability. In doing so, it sheds light on the factors that influence the financial sustainability of second-tier governments, which rely on external funding.

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Municipal financial vulnerability in pandemic crises: a framework for analysis

Cited by 20 publications

References 37 publications

An appraisal of financial indicators for local government: a structured literature review

An appraisal of financial indicators for local government: a structured literature review

Assessment of Financial Sustainability of Local Budgets in the Budget Management System Using Kohonen Maps

Does municipal fiscal distress hinder inter-municipal cooperation?

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