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Explaining the Relation Between Efficiency and Financial Condition: Empirical Analysis on Local Governments
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Author(s): Marco Bisogno (University of Salerno, Italy)and Beatriz Cuadrado-Ballesteros (University of Salamanca, Spain)
Copyright: 2018
Pages: 30
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.ch007
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Abstract
There is a risk of presupposing that enhancing efficiency will simply improve financial health in local governments. However, there are several reasons to think that the healthy governments could be the least efficient ones. This chapter aims to contribute to this discussion by using a sample of the 132 largest Italian local governments during the period 2005-2014. The results show that the taken-for-granted positive effect of efficiency on financial condition is observable only when efficiency refers to current expenditures, but such a positive effect has not been observed in the case of capital expenditures.
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