Financial aid for local governments: blessing or mismanagement? Online publication date: Mon, 27-Feb-2017
by Hannes W. Lampe; Dennis Hilgers
International Journal of Public Sector Performance Management (IJPSPM), Vol. 3, No. 1, 2017
Abstract: For decades the public sector seems incapable to not incur new debt or even save money to overcome the omnipresent stressed financial situation. This grievance is pervasive over several levels of public sector entities including municipalities, the federal states as well as central/national tier. On the local level, bailouts in form of loan repayment are understood as measures to deliver a sustainable solution to and thus overcome the stressed financial situations of municipalities. This study presents empirical evidence for a positive correlation of debt and cost inefficiency of municipalities' service provision. Furthermore, interest payments have a minor impact on this cohesion. These findings show that repayments of municipalities' debts are not a sustainable solution to overcome the stressed financial situation on the local government level. Highly indebted municipalities are inefficient in their service provision anyway.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Public Sector Performance Management (IJPSPM):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook