Explanatory factors of the financial condition in the municipalities of Minas Gerais
DOI:
https://doi.org/10.21680/2176-9036.2024v16n1ID31368Keywords:
Financial Condition, Public finances, Small MunicipalitiesAbstract
Purpose: Identify the explanatory factors of the financial condition of small municipalities in Minas Gerais.
Methodology: From the perspective of the Theory of Financial Condition, the research was carried out in two stages: first, the financial condition of the municipalities was calculated using Brown's (1993) model; Next, the financial variables capable of influencing the financial condition of the municipalities in the sample were identified. For this, accounting information was collected in the period from 2017 to 2020 from 229 municipalities in the state of Minas Gerais that had a population of less than 5 thousand inhabitants in the year 2020. An econometric model with panel data was used for analysis of the relations.
Results: The variables Personnel Expenditure (GP) and Degree of Indebtedness (GE) were events at a significance level of 1%, with GP being positively related and GE negatively related to the government's financial condition. So, the results prove the existence of financial factors related to budget solvency and long-term solvency that impact the financial condition of small municipalities.
Contributions of the Study: The research contributes to the literature on the explanatory factors of the financial condition by analyzing small municipalities, using a consolidated model in the international literature, especially amid the discussion of PEC 188/2019 on the merger of these municipalities. In addition, it can help public managers in decision-making by pointing out the explanatory factors that occurred for the municipal financial condition.
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