Scientific publications from the LGFS-Across initiative on comparative analysis models to enhance local governments' financial performance.
https://doi.org/10.1108/JPBAFM-10-2024-0215
Increased fiscal autonomy is often identified in studies as leading to improved financial health in local governments, while research finds those depending heavily on funding from other levels of government suffer a decline in financial health.
We analyze financial information from municipalities in nine different countries to gain a more nuanced understanding of this relationship.
Our analysis reveals a more complex picture, in which greater fiscal autonomy may benefit long-term solvency but challenge short-term liquidity and budget stability, potentially impacting overall financial health.
Our research reveals that there is no linear relationships between financial autonomy and financial health.
https://doi.org/10.1111/faam.12403
The COVID-19 pandemic cut across geographical, sectorial, and policy boundaries and imposed difficult health, economic, and social challenges. Among many learnings, after the 2007–2008 global financial crisis and the austerity period that followed it, the economic and health crises forged by the COVID-19 pandemic in 2020 offer an important experience to make local governments (LGs) more financially resilient and ready to deal with similar shocks.
This paper builds on a recent framework to investigate the impact of the first wave of the COVID-19 pandemic on LG financial vulnerability looking at both contingent and systemic aspects. It addresses the need for a multicountry perspective on the effects of the pandemic and responds to calls to test existing models. Seven countries were chosen to represent different administrative contexts and traditions to understand what factors impact the local level in a time of crisis. Results demonstrate that not only contingent aspects but also systemic factors and the initial level of financial vulnerability influenced the responses to the pandemic, confirming findings about the importance of initial conditions and “path dependency” by previous studies.
Country Chapter Authors:
Local Governments’ Financial Vulnerability presents a conceptual framework developed to examine how vulnerable local finances were before and in the immediate aftermath of the COVID-19 pandemic crisis by mapping and systematising its dimensions and sources.
The model is then applied to eight countries with different administrative models and traditions: Australia, Austria, Bosnia and Herzegovina, Germany, Italy, Portugal, Spain, and the United States. Comparative results reveal not only that COVID-19 impacts and policy tools had a lot of similarities across countries, but also that financial vulnerability has an inherently contingent nature in time and space and can lead to paradoxical outcomes. The book shows that the impact of the crisis on local governments’ finances has been postponed and that financial vulnerability is expected to increase dramatically for a few years following the pandemic, especially in larger and richer municipalities which are traditionally more autonomous and less financially vulnerable. The authors provide timely insights and analytical tools that can be useful for both academic and public policy purposes, to further appreciate local governments’ financial vulnerability, especially during crises.
This book is a valuable resource for practitioners and academics, as well as students of public policy, public management, financial management, and public accounting. Local governments can use the framework to better appreciate and manage their financial vulnerability, while oversight authorities can use it to help local governments become less financially vulnerable or, at least, more aware of their financial vulnerability. Financial institutions, advisors, and rating agencies may use this publication to refine or revise their models of credit risk assessment.
https://doi.org/10.4324/9781003274278-2
This chapter provides a review of the relevant theoretical concepts, namely the concept of financial vulnerability and its relationship to external institutional design, to internal issues of financial vulnerability, and to the perception of the capacity to cope with a crisis such as the COVID-19 pandemic. Based on this literature overview, a framework is developed to understand what factors contributed to financial vulnerability in local governments (LGs) and the consequent impact in the immediate aftermath of this global pandemic crisis. This conceptual framework will be applied to eight countries to appreciate the impact of the pandemic on local finances, exploring individual conditions that affected financial vulnerability across LGs.
https://doi.org/10.1108/JPBAFM-07-2020-0129
This paper explores how global pandemic crises affect the financial vulnerability of municipalities.
This paper is developed from the relevant literature an analytical framework to examine municipal financial vulnerability before a global pandemic crisis and in its immediate aftermath by mapping and systematizing its dimensions and sources. To illustrate how it can be used and evaluate its robustness and flexibility, such a tool was applied to Portugal and Italy, two countries that particularly suffered from the Covid-19 crisis.
The application of the analytical framework has shown how financially vulnerable municipalities are to global pandemic crises. Financial vulnerability relates to issues ranging from institutional design to internal financial conditions and the perception of the capacity to cope with a crisis. Results further reveal that vulnerability has an inherent contingent nature in time and space and can lead to paradoxical outcomes.
This paper provides a tool that can be useful for both academic and public policy purposes, to further appreciate municipal financial vulnerability, especially during crises.
Municipalities can use the framework to better manage their financial vulnerability, strengthening their anticipatory and copying capacities, while oversight authorities can use it to help municipalities become less financially vulnerable or, at least, more aware of their financial vulnerability.
Municipal financial vulnerability to global shocks has not been explored extensively. Also, the Covid-19 pandemic is different from previous global crises as it affected society overnight with the implementation of lockdown and social distancing measures.