Characterizing the Risk Factors for Financial Sustainability in Spanish Local Governments

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Author(s): Isabel Brusca (University of Zaragoza, Spain), Jorge Olmo (University of Zaragoza, Spain)and Margarita Labrador (University of Zaragoza, Spain)
Copyright: 2018
Pages: 18
Source title: Financial Sustainability and Intergenerational Equity in Local Governments
Source Author(s)/Editor(s): Manuel Pedro Rodríguez Bolívar (University of Granada, Spain)and María Deseada López Subires (University of Granada, Spain)
DOI: 10.4018/978-1-5225-3713-7.ch009

Keywords: Business Science Reference / Government & Law / Local Government / Public and Sector Management

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Abstract

This chapter aims to analyze the characteristics of Spanish governments that fail to achieve budgetary stability, as well as propose a model for the analysis of financial sustainability of governments that can help in predicting risk for financial sustainability. The analysis is focused on Spanish local governments with more than 5,000 inhabitants that have elaborated the annual plan because they did not achieve budgetary stability (79 local governments). Using the principal components analysis, the authors developed a model for the analysis of the characteristics of these governments. The model is made up of three components created from six indicators usually considered in the literature as relevant. The results evidence the indicators useful to measure the three dimensions identified by the IPSASB as relevant: revenue dimension, debt dimension, and public services dimension.

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Characterizing the Risk Factors for Financial Sustainability in Spanish Local Governments

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