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Inside Local Governance: How Well Is Debt Managed?

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  • Eymen Errais

    (Laboratoire de Recherche en Economie Quantitative du D veloppement, FSEGT, University of Tunis El Manar, B.P 248, El Manar II, 2092 Tunis, Tunisia)

Abstract

Several debates and concerns about local elections focus on whether local governance can take root in an environment where people have a very low trust in their rulers, and deliver the economic goods: A higher rate of investment, more growth and more jobs. In this paper we aim to understand whether local authorities have the financial means and management skills to face these challenges. More specifically, we address the issue of local debt management and propose a scoring system that rates municipalities' credit quality. Our methodology is based on a mix of quantitative modeling and qualitative analysis. Our data set incorporates all the 264 Tunisian Municipalities and spans a period over 7 years (2010-2016). Our results show that the main quantitative factor predicting good debt management is Net Cash Flow. The model shows strong efficiency and reliable predictive power.

Suggested Citation

  • Eymen Errais, 2019. "Inside Local Governance: How Well Is Debt Managed?," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 145-153.
    • Handle: RePEc:eco:journ1:2019-02-18
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    More about this item

    Keywords

    Local governance; default risk; debt management; credit risk factors;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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