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Article

Open Access

Financial Effectiveness of Greek Municipalities: An Empirical Investigation

Author(s)

Christos Pallis, Petros Pallis

Full-Text PDF Download XML 865 Views

DOI:10.17265/2328-2185/2016.05.001

Affiliation(s)

Christos Pallis, Ph.D., researcher, Department of Public Management, Panteion University, Kallithea, 17671, Attica, Greece.
Petros Pallis, Ph.D. student, researcher, University of Piraeus, Piraeus, Greece.

ABSTRACT

Municipalities are autonomous economic and administrative entities, with common actions and responsibilities. Moreover, all Municipalities are quite different considering specific characteristics, such as geographic, demographic, and economic. The aim of this research is to separate the entire sample of Municipalities in Greece into categories, based on the effectiveness of financial management and financial performance into effective and ineffective ones. For the separation of the sample into groups, cluster analysis was preferred. For this reason, three variables were used: the lending capacity of the Municipality, flexibility in making non-investment costs, and flexibility in investment spending. These three variables were considered to be the key dimensions of effectiveness in financial management and therefore their use, representatively describes the effectiveness of Greek Municipalities. Thus, this paper presents the literature review of the financial effectiveness of Municipalities and the methodology of an empirical research through structured questionnaire that was sent to the entire population of Greek Municipalities, characterized in this way with considerable heterogeneity. In this way, it investigates the views of Mayors in the two categories of Municipalities (effective and non effective financial management and financial performance) as regards: (a) the biggest problems faced by the citizens in their Municipality, and (b) the biggest personnel problems faced by their Municipality. Concluding, the prioritization of both problems seems to be the same for both groups of Municipalities. The frequency of responses differs slightly and differences are not so large that financial performance can be considered to affect respondents’ opinions.

KEYWORDS

Greek Municipalities, local development, public finance, financial performance, financial management, empirical investigation

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