H72 - State and Local Budget and ExpendituresReturn

Transparency of public management is fundamental to bringing citizens closer to public managers and as such universally considered an element of good governance.
The main aim of this study is to identify the factors determining transparency in public management of Portuguese local authorities. Using the Municipal Transparency Index of 2013 and 2014, socio-demographic, political and economic-financial variables are studied for the population of 308 Portuguese local authorities by the means of testing the previously formulated research hypotheses in the light of the agency theory.
The results show that transparency in public management of Portuguese local authorities is determined by their size, the number of individuals aged between 15 and 74 who use the internet, unemployment rate, financial autonomy and the net debt.

As public institutions are faced with more diverse and increased community needs, significant concern arises (both in academia and practice) for the dwindling resources available at the local level and the factors which can influence local revenue mobilization. Using data for 3,227 Romanian territorial-administrative (all Romanian territorial administrative units except Bucharest - the capital city), this research compares local revenue mobilization (calculated as: effectively collected revenues, as a share of what was predicted at the beginning of the budgetary year) for the 2008 - 2011 period, trying to determine if the type of a territorial administrative unit influences its public revenue mobilization. The post hoc ANOVA showed that the type of a local institution (be it commune, city, municipality, county or sector) does not affect the level of revenue collection (proxied by collected/predicted revenues); where such relationships between these two variables were found, they were rather spurious and did not surfaced across the entire dataset.

The article provides direct empirical evidence on fiscal decentralisation and economic development in selected European countries in a period 1995-2012. The research (based on data taken from OECD Fiscal Decentralisation Database and OECD) is performed on a panel, which contains 17 unitary countries. Explanatory variables are not examined in individual regressions, but study newly uses Generalized Method of Moments. For a model specification, Dynamic Panel Data Model Wizard is applied. Results of dynamic panel analysis suggest positive and statistically significant impact of expenditure decentralisation and stronger but negative effect of revenue decentralisation on economic development. Effect of tax decentralisation seems to be negative but statistically insignificant. These findings are enormously interesting as the relationship between the different decentralisation measures and economic performance evolves in opposite directions and countries tend to increase revenue fiscal decentralisation over the last years.

The drastic increase in volume of local government debt in Hungary started in 2006. My hypothesis assumes that a supposable improvement in local municipal financial management might resulted in the spread of bond issue, which in Hungary is still considered innovative. The paper is aimed at examining factors that might have been behind indebtedness, and tries to separate the effect of internal and external factors. Under the notion "internal factors" I mean whether potential issuers are adequately informed, professionally trained and motivated. Another aim of the research is to survey local governments' attitude towards bond financing as well, that is to determine factors not necessarily rational but sometimes subjective, which can result in impeding resource deployment through bond issuance. My research, which was based on a stratified sample of 308 Hungarian municipalities, came to the conclusion that expertise of local governments' financial executives related to loan financing is extremely low. The majority of local governments is unable to distinguish the economic differences between bank loans and bonds, and is unclear concerning the potential benefits, advantages, and disadvantages of bonds. No wonder that nearly all the bonds were issued privately where the buyers were solely commercial banks. In addition, 12-18% of the municipalities has prejudices and clearly has misconceptions about obtaining funds through borrowing. According to the principal component analysis local governments' knowledge level can be classified and explained by three components: theoretical knowledge of local borrowing, knowledge of legal and administrative regulation, and skill in capital market financing. By summing up the results it can be stated that the improvement in local financial management couldn't have been the primary reason for municipal bond boom, but there were external factors that determined and dominated this process of booming.