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Does financial health influence the re-election of local governments?

Does financial health influence the re-election of local governments? PurposeThe purpose of this paper is to investigate the possible influence of financial health of local governments (LGs) on the re-election of politicians.Design/methodology/approachThe study investigates a sample of 129 Italian LGs with more than 50,000 inhabitants for the period 2008–2014, resulting in 903 observations. A regression model has been implemented, where the dependent variable refers to the probability of re-election, and different dimensions of financial health are the independent variables.FindingsBudgetary and service-level solvency influence positively the probability of re-election of the major, while the ability of the government to generate liquidity to pay its short-term debts is not statistically relevant. Moreover, the sustainability dimension of budgetary solvency is more relevant than the flexibility and vulnerability dimensions.Practical implicationsTo be re-elected, local politicians are advised to pay attention to and preserve the social welfare of citizens with the available resources.Originality/valueThis study adds fresh insight to the literature on financial health, emphasising the relevance of public financial management in the re-election of local politicians. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Public Budgeting Accounting & Financial Management Emerald Publishing

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References (69)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1096-3367
DOI
10.1108/JPBAFM-10-2018-0114
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to investigate the possible influence of financial health of local governments (LGs) on the re-election of politicians.Design/methodology/approachThe study investigates a sample of 129 Italian LGs with more than 50,000 inhabitants for the period 2008–2014, resulting in 903 observations. A regression model has been implemented, where the dependent variable refers to the probability of re-election, and different dimensions of financial health are the independent variables.FindingsBudgetary and service-level solvency influence positively the probability of re-election of the major, while the ability of the government to generate liquidity to pay its short-term debts is not statistically relevant. Moreover, the sustainability dimension of budgetary solvency is more relevant than the flexibility and vulnerability dimensions.Practical implicationsTo be re-elected, local politicians are advised to pay attention to and preserve the social welfare of citizens with the available resources.Originality/valueThis study adds fresh insight to the literature on financial health, emphasising the relevance of public financial management in the re-election of local politicians.

Journal

Journal of Public Budgeting Accounting & Financial ManagementEmerald Publishing

Published: Sep 2, 2019

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