The issue of sustainability in a highly centrally regulated fiscal model of local governments: an empirical study

2020 ◽  
Vol 33 (6) ◽  
pp. 669-689 ◽  
Author(s):  
András Bethlendi ◽  
Csaba Lentner ◽  
László Nagy
Keyword(s):  
Financial Management ◽  
Local Governments ◽  
Central Government ◽  
Annual Reports ◽  
Social Characteristics ◽  
Financial Sustainability ◽  
Soft Budget Constraint ◽  
Data Set ◽  
Content Type

Purpose This study aims to assess the sustainability of local governments in a highly centrally regulated fiscal model. Design/methodology/approach This paper uses a novel approach, a broad data set of almost 3,200 local governments and network methods. This paper analyses financial data from annual reports and other socio-economic sources using cluster analysis. Findings Even in this model, local governments show significant differences in terms of long-term sustainability. Investments do not compensate for the depreciation of tangible assets at a significant part of local governments. A specific type of soft budget constraint can be noticed. Heads of local governments do not “play” for subsequent ad hoc bailouts by the central government, but rather engage themselves in political competition for development subsidies. A further finding of this study is that shrinking populations itself does not explain the differences in local governments’ financial management. Research limitations/implications Further directions of research include the application of an extended approach to sustainability that gives an account of the availability and quality of local services, as well as aims to identify the qualitative social characteristics (success criteria) of the local government financial management. Practical implications The findings can be useful for policymakers, state audit offices, auditors, voters, users of public services and other stakeholders. Social implications The paper argues in favour of moving away from the financial balance in its narrow sense to a long-term and broader term of financial sustainability. Originality/value The findings provide new empirical evidence about the accounting-based measurement of financial sustainability in local governments.

scholarly journals Hardening the budget constraint: Institutional reform in the financial management of Hungarian local governments

2020 ◽  
Vol 70 (4) ◽  
pp. 571-592
Author(s):  
Tamás Vasvári
Keyword(s):  
Financial Management ◽  
Local Governments ◽  
Central Government ◽  
Budget Constraint ◽  
Soft Budget Constraint ◽  
Fiscal Discipline ◽  
Financial Independence ◽  
Political Interests ◽  
The One ◽  
Negative Messages

AbstractKornai (2014) described the problems of municipal indebtedness in Hungary and analysed the process of bailout carried out between 2011 and 2014. In the same period, the central government also reformed the local government system, which included serious limitations of their financial independence. This study re-examines the state of the soft budget constraint (SBC) of Hungarian local governments. To start, the general theoretical framework of SBC is introduced. Then, the budget constraint on the Hungarian local governments before the bailout is described briefly, followed by an assessment of the corresponding measures which were expected to offset the negative messages of the completed bailout and to harden the budget constraint. The study concludes that the central government decided to harden the budget constraint through the introduction of new hierarchical mechanisms, while the development of fiscal discipline stopped. On the one hand, this resulted in the consolidation of municipal budgets, but on the other, it was accompanied by a serious limitation of local autonomy, projects and borrowing in general, while the central government employs specific administrative tools to show favour to some settlements according to its (political) interests.

Operating within the boundaries of legislation, accountability and personal agendas

2019 ◽  
Vol 27 (3) ◽  
pp. 346-365
Author(s):  
Sotirios Karatzimas ◽  
Carles Griful Miquela
Keyword(s):  
Local Governments ◽  
Choice Theory ◽  
Point Of View ◽  
Financial Sustainability ◽  
Online Questionnaire ◽  
Content Type ◽  
The Public ◽  
Long Run ◽  
The Impact

Purpose The purpose of this paper is to examine and compare the views of mayors and comptrollers of Catalan municipalities on aspects related to the Spanish legislation on financial sustainability – its usefulness and necessity of maintaining, its impact on citizens’ welfare and alternative proposals. The setting is rather interesting as strict rules are imposed by a legislation criticized of mimicking European Commission policies, on well-performing municipalities, in light of the recent “independency” conflict. Design/methodology/approach The study uses insights from the public choice theory and the concept of accountability to draw a framework that could explain the perceptions of mayors and comptrollers. The views of the two groups are captured with the use of an online questionnaire. Findings The results indicate that while the application of strict rules has borne fruit, this trend is not sustainable in the long run and a careful reconsideration is required. Accordingly, both groups express concerns on citizens’ future welfare. It moreover appears that in this particular setting, mayors’ and comptrollers’ sense of accountability toward citizens exceed their personal interests. Originality/value This study provides empirical evidence on the impact of strict budget stability and sustainability rules on the long-term financial sustainability of local governments from the point of view of mayors and municipality comptrollers who are called to implement them.

Enterprise risk management and sustainability of banks performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Babajide Oyewo
Keyword(s):  
Risk Management ◽  
Banking Sector ◽  
Management Practice ◽  
Enterprise Risk Management ◽  
Annual Reports ◽  
Banking Reform ◽  
Content Type ◽  
Enterprise Risk ◽  
The Impact

PurposeThis study investigates firm attributes (namely level of capitalisation, scope of operation, organisational structure, organisational lifecycle, systemic importance and size) affecting the robustness of enterprise risk management (ERM) practice, the extent to which ERM affects the performance of banks and the impact of ERM on the long-term sustainability of banks in Nigeria. This was against the backdrop that the 2012 banking reform was a major regulatory intervention that mainstreamed ERM in the Nigerian banking sector.Design/methodology/approachThe study employed a mixed methodology of content, trend and quantitative analyses. Ex post facto research design was deployed to analyse performance differential of banks, with respect to the implementation of ERM, over a 10-year period (2008–2017). A disclosure checklist developed from the COSO ERM integrated framework was used to assess the robustness of ERM by content-analysing divulgence on risk management in published annual reports. The banking reform periods were dichotomised into pre- (2008–2012) and post- (2013–2017) reform periods. Jonckheere–Terpstra test, independent sample t-test and Mann–Whitney test were applied to analyse a total of 1,036 firm-year observations over the period 2008–2017.FindingsResult shows that bank attributes significantly affecting the robustness of risk management practice are level of capitalisation, scope of operation, systemic importance and size. Performance of banks improved slightly during the post-2012 banking reform period. This suggests that as banks consolidate on the gains of ERM, benefits of the regulatory policy on risk management may be realised in the long run. Result also shows that ERM enhances long-term performance, connoting that effective risk management could serve as a competitive strategy for surviving turbulence that typically characterises the banking sector.Practical implicationsThe emergence of level of capitalisation, scope of operation, systemic importance and size as determinants of ERM provides empirical evidence to support the practice of reviewing the capital requirements for banking business from time to time by regulatory authorities (i.e. recapitalisation policy) as a strategy for managing systemic risk. Top management of banks may consider instituting mechanisms that will ensure risk management is given prominence. A proactive approach must be taken to convert risks to opportunities by banks and other financial institutions, going forward, to cope with the vicissitudes of financial intermediation.Originality/valueThe originality of the study stems from the consideration that it provides some new insights into the impact of ERM on banks long-term sustainability in a developing country. The study also contributes to knowledge by exposing the factors determining the robustness of risk management practice. The study developed a checklist for assessing ERM practice from annual reports and other risk management disclosure documents. The paper also adds to the scarce literature on risk governance and risk management.

scholarly journals On self-neglect and safeguarding adult reviews: diminishing returns or adding value?

2017 ◽  
Vol 19 (2) ◽  
pp. 53-66 ◽  
Author(s):  
Michael Preston-Shoot
Keyword(s):  
Thematic Analysis ◽  
Annual Reports ◽  
National Database ◽  
Service Improvement ◽  
Policy And Practice ◽  
Data Set ◽  
Content Type ◽  
Core Data ◽  
The Core

Purpose The purpose of this paper is twofold: first, to update the core data set of self-neglect serious case reviews (SCRs) and safeguarding adult reviews (SARs), and accompanying thematic analysis; second, to respond to the critique in the Wood Report of SCRs commissioned by Local Safeguarding Children Boards (LSCBs) by exploring the degree to which the reviews scrutinised here can transform and improve the quality of adult safeguarding practice. Design/methodology/approach Further published reviews are added to the core data set from the websites of Safeguarding Adults Boards (SABs) and from contacts with SAB independent chairs and business managers. Thematic analysis is updated using the four domains employed previously. The findings are then further used to respond to the critique in the Wood Report of SCRs commissioned by LSCBs, with implications discussed for Safeguarding Adult Boards. Findings Thematic analysis within and recommendations from reviews have tended to focus on the micro context, namely, what takes place between individual practitioners, their teams and adults who self-neglect. This level of analysis enables an understanding of local geography. However, there are other wider systems that impact on and influence this work. If review findings and recommendations are to fully answer the question “why”, systemic analysis should appreciate the influence of national geography. Review findings and recommendations may also be used to contest the critique of reviews, namely, that they fail to engage practitioners, are insufficiently systemic and of variable quality, and generate repetitive findings from which lessons are not learned. Research limitations/implications There is still no national database of reviews commissioned by SABs so the data set reported here might be incomplete. The Care Act 2014 does not require publication of reports but only a summary of findings and recommendations in SAB annual reports. This makes learning for service improvement challenging. Reading the reviews reported here against the strands in the critique of SCRs enables conclusions to be reached about their potential to transform adult safeguarding policy and practice. Practical implications Answering the question “why” is a significant challenge for SARs. Different approaches have been recommended, some rooted in systems theory. The critique of SCRs challenges those now engaged in SARs to reflect on how transformational change can be achieved to improve the quality of adult safeguarding policy and practice. Originality/value The paper extends the thematic analysis of available reviews that focus on work with adults who self-neglect, further building on the evidence base for practice. The paper also contributes new perspectives to the process of conducting SARs by using the analysis of themes and recommendations within this data set to evaluate the critique that reviews are insufficiently systemic, fail to engage those involved in reviewed cases and in their repetitive conclusions demonstrate that lessons are not being learned.

scholarly journals Accountability reporting objectives of Māori organizations

2018 ◽  
Vol 30 (4) ◽  
pp. 433-443 ◽  
Author(s):  
Russell Craig ◽  
Rawiri Taonui ◽  
Susan Wild ◽  
Lũcia Lima Rodrigues
Keyword(s):  
New Zealand ◽  
Design Methodology ◽  
Indigenous Communities ◽  
Core Values ◽  
Annual Reports ◽  
Content Type ◽  
Cultural Activities ◽  
The Core ◽  
Regional Associations

Purpose This paper aims to highlight the accountability reporting objectives of four Māori-controlled organizations. The examples cited reflect the core values of the indigenous Māori people of New Zealand (Aotearoa) and help demonstrate how these values are manifest in the accountability reporting of Māori-controlled organizations. Design/methodology/approach Narrative sections of ten annual reports of two small and two large Maori organizations, drawn variously from their financial years ending in the calendar years 2009 to 2014, are read closely. These organizations represent diverse tribal and regional associations in terms of size, scope and structure; and in terms of the business, social and cultural activities they pursue. Findings Three core Māori values are identified: spirituality (wairuatanga); intergenerationalism and restoration (whakapapa); and governance, leadership and respect (mana and rangatiratanga). The commitment to these values and the way this commitment is reflected in accountability reports of Maori organizations, is presented. Originality/value The examples provided, and the associated discussion, should help inform reporting initiatives of organizations that are seeking better accountability in terms of their long-term engagement with indigenous communities, the environment and broader society.

scholarly journals Revenue diversification and financial sustainability of microfinance institutions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Peter Nderitu Githaiga
Keyword(s):  
Generalized Method Of Moments ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Revenue Diversification ◽  
Estimation Model ◽  
Data Set ◽  
Content Type ◽  
Method Of Moments Estimation ◽  
The Impact ◽  
Positive Effect

PurposeThis paper aims to investigate whether revenue diversification affects the financial sustainability of microfinance institutions (MFIs).Design/methodology/approachThe study uses a worldwide panel data set of 443 MFIs in 108 countries for the period 2013–2018 and two-step system Generalized Method of Moments estimation model.FindingsThe study finds that revenue diversification has a significant and positive effect on the financial sustainability of MFIs.Practical implicationsThe findings of this study actually offer important managerial and policy lessons on MFIs’ financial sustainability. Microfinance managers and policymakers should consider revenue diversification as a strategy through which MFIs can attain financial sustainability instead of overreliance on donations and government subsidiesOriginality/valueUnlike previous studies that examined revenue diversification in the context of banking firms, this study contributes to literature by examining the impact of revenue diversification of the financial sustainability of MFIs.

scholarly journals THE ROLE OF LOCAL GOVERNMENTS IN REGIONAL FINANCIAL MANAGEMENT FOR THE HANDLING OF THE COVID-19 PANDEMIC

Yurispruden ◽  
2021 ◽  
Vol 4 (2) ◽  
pp. 208
Author(s):  
Fahrul Abrori
Keyword(s):  
Local Government ◽  
Research Methods ◽  
Financial Management ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
The Government ◽  
The Stability ◽  
The Relationship

 ABSTRAKPandemi Covid-19 yang terjadi di Indonesia membuat pemerintah membuat kebijakan-kebijakan sebagai stimulus untuk menjaga kestabilan masyarakat dan perekonomian. Pemerintah pusat memberikan kewenangan kepada pemerintah daerah untuk mengelola keuangan daerah untuk menangani covid-19 di daerah masing-masing. Hal ini disebabkan karena pemerintah daerah lebih memahami kebutuhan daerahnya. Permasalahan yang diangkat Pertama, bagaimana hubungan Pemerintah Pusat dan Pemerintah Daerah dalam pengelolaan keuangan untuk penanganan pandemi Covid-19? Kedua, Apa peran Pemerintah Daerah dalam pengelolaan keuangan daerah untuk penanganan pandemi Covid-19? Menggunakan metode penelitian yuridis normatif dengan pendekatan perundang-undangan dan pendekatan konsep. Hubungan Pemerintah Pusat dan Pemerintah Daerah dalam Pengelolaan Keuangan untuk Penanganan Pandemi Covid-19 yaitu desentralisasi fiskal yang mana. Peran Pemerintah Daerah dalam Pengelolaan Keuangan Daerah untuk Penanganan Pandemi Covid-19 yaitu dengan melakukan refocusing kegiatan, realokasi anggaran, dan Penggunaan Anggaran Pendapatan dan Belanja Daerah.Kata kunci: Pemerintah Daerah, Pengelolaan Keuangan Daerah, Pandemi Covid-19 ABSTRACTThe Covid-19 pandemic in Indonesia led the government to make policies as a stimulus to maintain the stability of society and the economy. The central government authorizes local governments to manage local finances to deal with covid-19 in their respective regions. This is because the local government better understands the needs of the region. The issue raised first, how is the relationship between the Central Government and Local Government in financial management for the handling of the Covid-19 pandemic? Second, What is the role of local governments in regional financial management for the handling of the Covid-19 pandemic? Using normative juridical research methods with statutory approaches and concept approaches. The relationship between the Central Government and Local Government in Financial Management for the Handling of the Covid-19 Pandemic is fiscal decentralization. The role of local governments in regional financial management for the handling of the Covid-19 pandemic is by refocusing activities, reallocating budgets, and using regional budgets.Keywords: Local Government, Regional Financial Management, Covid-19 Pandemic

scholarly journals Effects of agricultural credit on wheat productivity of small farms in Sindh, Pakistan

2018 ◽  
Vol 78 (5) ◽  
pp. 592-610 ◽  
Author(s):  
Abbas Ali Chandio ◽  
Yuansheng Jiang ◽  
Feng Wei ◽  
Xu Guangshun
Keyword(s):  
Wheat Yield ◽  
Considerable Proportion ◽  
Small Scale ◽  
Small Farms ◽  
Short Term ◽  
Agricultural Credit ◽  
Data Set ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to evaluate the impact of short-term loan (STL) vs long-term loan (LTL) on wheat productivity of small farms in Sindh, Pakistan. Design/methodology/approach The econometric estimation is based on cross-sectional data collected in 2016 from 18 villages in three districts, i.e. Shikarpur, Sukkur and Shaheed Benazirabad, Sindh, Pakistan. The sample data set consist of 180 wheat farmers. The collected data were analyzed through different econometric techniques like Cobb–Douglas production function and Instrumental variables (two-stage least squares) approach. Findings This study reconfirmed that agricultural credit has a positive and highly significant effect on wheat productivity, while the short-term loan has a stronger effect on wheat productivity than the long-term loan. The reasons behind the phenomenon may be the significantly higher usage of agricultural inputs like seeds of improved variety and fertilizers which can be transformed into the wheat yield in the same year. However, the LTL users have significantly higher investments in land preparation, irrigation and plant protection, which may lead to higher wheat production in the coming years. Research limitations/implications In the present study, only those wheat farmers were considered who obtained agricultural loans from formal financial institutions like Zarai Taraqiati Bank Limited and Khushhali Bank. However, in the rural areas of Sindh, Pakistan, a considerable proportion of small-scale farmers take credit from informal financial channels. Therefore future researchers should consider the informal credits as well. Originality/value This is the first paper to examine the effects of agricultural credit on wheat productivity of small farms in Sindh, Pakistan. This paper will be an important addition to the emerging literature regarding effects of credit studies.

The role of the Troika on the Greek central government accounting reforms

2018 ◽  
Vol 31 (3) ◽  
pp. 316-330 ◽  
Author(s):  
Sandra Cohen ◽  
Sotirios Karatzimas
Keyword(s):  
Financial Reporting ◽  
Financial Management ◽  
Central Government ◽  
Case Study Research ◽  
Extreme Case ◽  
Resource Dependency ◽  
Reform Process ◽  
Content Type

Purpose The purpose of this paper is to explore the role of the Troika’s advent played in the progress of the budgeting and the financial reporting systems reform at the Greek central government level. Design/methodology/approach The approach of an extreme country case study is adopted. The data used in the paper have been identified through document analysis performed on the relevant documents produced by the Troika, the Greek Ministry of Finance, and other relevant sources. The reform process is seen through the lens of the neo-institutional theory and the resource dependency theory. Findings Although both reforms targeted the introduction of best international practices – particularly useful in periods of financial distress and scarce resources – the advent of the Troika affected their progress and changed the priorities. As a result, the reform was redirected toward strengthening the cash budgeting system. Research limitations/implications The study is subject to the limitations of an extreme case study research. Practical implications This is a case where resource dependency changes political priorities and directions and affects the evolvement of state budget and accounting reforms under way. Originality/value The role of external fund providers in public sector financial management reform priority-setting, in the case of a developed Eurozone country, is analyzed. The study contributes to the research agenda on accounting practices in times of austerity.

Guest editorialHappy endings and successful stories in public sector financial management: a lesson drawing perspective

2021 ◽  
Vol 34 (4) ◽  
pp. 393-406
Author(s):  
Sandra Cohen ◽  
Francesca Manes-Rossi ◽  
Isabel Brusca ◽  
Eugenio Caperchione
Keyword(s):  
Public Sector ◽  
Financial Management ◽  
Local Governments ◽  
Financial Statements ◽  
Special Issue ◽  
Content Type ◽  
Public Financial Management ◽  
Political Implications ◽  
Public Sector Organizations ◽  
And Performance

PurposePublic financial management has been characterized by the implementation of several innovations and reforms that embrace different areas and scope. These reforms aim at expenditure rationalization and efficiency enhancement, as well as the improvement of accountability and performance. Despite research having already paid attention to these innovations and reforms, the strengths, weaknesses, opportunities and threats empirically faced by public sector organizations still need to be investigated. This editorial introduces the special issue by emphasizing on the lessons that can be learned from past reform experiences.Design/methodology/approachThe editorial synthesizes some of the findings of the previous literature and evidences the necessity of both successful and unsuccessful stories, presenting a future agenda of research which emphasizes the use of case studies as a suitable method to get insights out of multiple experiences.FindingsThe four articles presented in this special issue, covering the topics of accrual accounting adoption, the use of financial statements by councilors, the use of performance information by politicians and the outsourcing of auditing in local governments, provide an overview of the efforts and challenges faced by public administrations by analyzing the influence of the institutional context, the relevance of political implications and their practical footprint.OriginalityIn this special issue, four successful stories that touch upon multiple facets of public financial management in different country contexts are discussed, and they signal important takeaway messages for further reforms.

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