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Does municipal fiscal distress hinder inter-municipal cooperation?

Matteo Bocchino (Social Science, Gran Sasso Science Institute, L'Aquila, Italy)
Emanuele Padovani (Department of Management, University of Bologna, Bologna, Italy)

Journal of Public Budgeting, Accounting & Financial Management

ISSN: 1096-3367

Article publication date: 11 March 2021

Issue publication date: 15 October 2021

297

Abstract

Purpose

Inter-municipal cooperation (IMC) has been increasingly adopted worldwide to tackle issues of size and cost reduction in the provision of public services. Although the determinants of cooperation among municipalities have been widely investigated in the prior literature, little is known about the link between a municipality's financial health and that of the supra-municipal entity formed under IMC. The purpose of this study is to fill this research gap by analyzing the case of municipal unions (MUs) in Italy.

Design/methodology/approach

A quantitative approach has been used, applying OLS and quantile regression on financial information and other variables of municipalities and their MUs.

Findings

The study finds that the most important condition of operation for IMC, that is, financial sustainability, is directly linked to the financial health of member municipalities and the functional integration reached with the supra-municipal entity.

Originality/value

The study analyses all MUs in Italy, focusing on the factors affecting their financial sustainability. In doing so, it sheds light on the factors that influence the financial sustainability of second-tier governments, which rely on external funding.

Keywords

Acknowledgements

The authors gratefully acknowledge the comments received by Silvia Bolgherini, University Naples Federico II, the colleagues of the Local Government Financial Sustainability Across countries (LGFS-Across) network, and the two anonymous reviewers during the review process.

Citation

Bocchino, M. and Padovani, E. (2021), "Does municipal fiscal distress hinder inter-municipal cooperation?", Journal of Public Budgeting, Accounting & Financial Management, Vol. 33 No. 5, pp. 552-574. https://doi.org/10.1108/JPBAFM-07-2020-0095

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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