IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v12y2020i17p6880-d403422.html
   My bibliography  Save this article

Testing the Reliability of Financial Sustainability. The Case of Spanish Local Governments

Author

Listed:
  • Vicente Pina

    () (Department of Accounting and Finance, Faculty of Economics and Business Administration, University of Zaragoza, Gran Vía, 2, 50005 Zaragoza, Spain)

  • Patricia Bachiller

    () (Department of Accounting and Finance, Faculty of Economics and Business Administration, University of Zaragoza, Gran Vía, 2, 50005 Zaragoza, Spain)

  • Lara Ripoll

    () (Department of Accounting and Finance, Faculty of Economics and Business Administration, University of Zaragoza, Gran Vía, 2, 50005 Zaragoza, Spain)

Abstract

Local Governments (LGs) have strengthened the financial control as a consequence of mandatory requirements to ensure financial sustainability in their management. The aim of this study is to determine whether financial indicators about financial conditions defined in Spanish regulation are backed by worldwide generally accepted financial benchmarking indicators. For this purpose, we analyze the relationship between Spanish indicators of financial sustainability based on European Union (EU) regulations and Financial Trends Monitoring System Indicators (FTMS) of the International City/County Management Association (ICMA). For this purpose, two methodologies are applied: discriminant analysis and logistic regression, where the dependent variables are each of the Spanish financial indicators and the independent variables are ICMA indicators. The evidence supports that variables that are related to the control of expenditures, debt and the revenues show a greater explanatory power of financial sustainability, being the most important elements which offer relevant information about the financial sustainability measurement of LGs.

Suggested Citation

  • Vicente Pina & Patricia Bachiller & Lara Ripoll, 2020. "Testing the Reliability of Financial Sustainability. The Case of Spanish Local Governments," Sustainability, MDPI, Open Access Journal, vol. 12(17), pages 1-20, August.
  • Handle: RePEc:gam:jsusta:v:12:y:2020:i:17:p:6880-:d:403422
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/12/17/6880/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/12/17/6880/
    Download Restriction: no

    References listed on IDEAS

    as
    1. Marco Meneguzzo & Alessandro Sancino & Marcel Guenon & Gloria Fiorani, 2013. "New development: The crisis and European local government reforms," Public Money & Management, Taylor & Francis Journals, vol. 33(6), pages 459-462, November.
    2. Robbins Geraldine & Turley Gerard & McNena Stephen, 2016. "Benchmarking the financial performance of local councils in Ireland," Administration, Sciendo, vol. 64(1), pages 1-27, May.
    3. 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, Open Access Journal, vol. 11(20), pages 1-11, October.
    4. Eric S. Zeemering, 2018. "Sustainability management, strategy and reform in local government," Public Management Review, Taylor & Francis Journals, vol. 20(1), pages 136-153, January.
    5. Gerard Turley & Geraldine Robbins & Stephen McNena, 2015. "A Framework to Measure the Financial Performance of Local Governments," Local Government Studies, Taylor & Francis Journals, vol. 41(3), pages 401-420, May.
    6. Sabine Kuhlmann & Tim Jäkel, 2013. "Competing, collaborating or controlling? Comparing benchmarking in European local government," Public Money & Management, Taylor & Francis Journals, vol. 33(4), pages 269-276, July.
    7. Juan Lara-Rubio & Salvador Rayo-Cantón & Andrés Navarro-Galera & Dionisio Buendia-Carrillo, 2017. "Analysing credit risk in large local governments: an empirical study in Spain," Local Government Studies, Taylor & Francis Journals, vol. 43(2), pages 194-217, March.
    8. 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.
    9. Andrés Navarro-Galera & Francisco José Alcaraz-Quiles & David Ortiz-Rodriguez, 2018. "Enhancing Sustainability Transparency in Local Governments—An Empirical Research in Europe," Sustainability, MDPI, Open Access Journal, vol. 10(7), pages 1-22, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    financial sustainability; local governments; financial condition; benchmarking; financial indicators;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:12:y:2020:i:17:p:6880-:d:403422. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (XML Conversion Team). General contact details of provider: https://www.mdpi.com/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.