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Phenomenology of financial vulnerability in French municipalities of 2,000 to 10,000 inhabitants

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  • Akim A. Tairou

    (ESA-CERAG, Universite de Grenoble II)

Abstract

Municipalities financial distress (which we refer as financial vulnerability) is a recurrent concern of French political life. However, there is no universal and unique definition of financial distress. This paper presents a synthesis of some possible definitions and display the real importance of this phenomenon in French municipalities of 2,000 to 10,000 inhabitants. The results show that a combination of Direction de la Comptabilité Publique criteria, debt to overall cash flow ratio, and net cash flow, provides an interesting solution to identify vulnerable municipalities. They also show that vulnerability is a frequent, repetitive, and durable phenomenon. We finally observe that there are significant differences in socio-economic characteristics between vulnerable municipalities and non-vulnerable ones. Nevertheless, in opposition to common assertions, tax potential seems not to be a discriminant element.

Suggested Citation

  • Akim A. Tairou, 1997. "Phenomenology of financial vulnerability in French municipalities of 2,000 to 10,000 inhabitants," Public Economics 9705002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwppe:9705002
    Note: Type of Document - LaTex/PostScript; prepared on PC WIN 95 : WinEdt + emTeX + dvips; to print on HP/PostScript; pages: 40 ; figures: No figures
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    References listed on IDEAS

    as
    1. Copeland, Rm & Ingram, Rw, 1982. "The Association Between Municipal Accounting Information And Bond Rating Changes," Journal of Accounting Research, Wiley Blackwell, vol. 20(2), pages 275-289.
    2. Wilson, Er & Howard, Tp, 1984. "The Association Between Municipal Market Measures And Selected Financial-Reporting Practices - Additional Evidence," Journal of Accounting Research, Wiley Blackwell, vol. 22(1), pages 207-224.
    3. Wescott, Sh, 1984. "Accounting Numbers And Socioeconomic Variables As Predictors Of Municipal General Obligation Bond Ratings," Journal of Accounting Research, Wiley Blackwell, vol. 22(1), pages 412-423.
    4. Ingram, Rw & Copeland, Rm, 1982. "Municipal Market Measures And Reporting Practices - An Extension," Journal of Accounting Research, Wiley Blackwell, vol. 20(2), pages 766-772.
    5. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1994. "Generational Accounting: A Meaningful Way to Evaluate Fiscal Policy," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 73-94, Winter.
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    More about this item

    Keywords

    Municipalities; France; Financial vulnerability; Financial distress.;
    All these keywords.

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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