Cost efficiency and financial situation of local governments in the Canary Isles during the recession

  1. Prior, Diego 1
  2. Martín-Pinillos-Castellanos, Ignacio 2
  3. Pérez-López, Gemma 3
  4. Zafra-Gómez, José L. 3
  1. 1 Universitat Autònoma de Barcelona
    info

    Universitat Autònoma de Barcelona

    Barcelona, España

    ROR https://ror.org/052g8jq94

  2. 2 Universidad de La Laguna
    info

    Universidad de La Laguna

    San Cristobal de La Laguna, España

    ROR https://ror.org/01r9z8p25

  3. 3 Universidad de Granada
    info

    Universidad de Granada

    Granada, España

    ROR https://ror.org/04njjy449

Journal:
Revista de contabilidad = Spanish accounting review: [RC-SAR]

ISSN: 1138-4891

Year of publication: 2019

Volume: 22

Issue: 2

Pages: 129-144

Type: Article

DOI: 10.6018/RCSAR.376091 DIALNET GOOGLE SCHOLAR lock_openDialnet editor

More publications in: Revista de contabilidad = Spanish accounting review: [RC-SAR]

Sustainable development goals

Abstract

This paper examines cost efficiency in the Spanish municipal public sector, in a specific geographic area (the Canary Isles, Spain), with respect to financial condition and different types of municipal debt. The study focuses on municipalities dependent on tourism and on the consequences to them of the Great Recession, doing so via a two-stage analysis. In the first, the order-m method is used to evaluate the cost efficiency of 77 Canary Isles municipalities, for the period 2008-12. In the second stage, we examine the effect produced on cost efficiency by different types of borrowing (long term, short term, financial and commercial) together with other financial, economic, political and quality variables, using the model developed by Simar and Wilson (2007), based on a truncated bootstrap regression with panel data. Empirical analysis shows that in times of crisis there is a significant relationship between the components of financial condition and cost efficiency. In conclusion, municipal cost efficiency increases with commercial debt, but decreases with financial debt. Furthermore, certain socioeconomic variables affect the levels of cost efficiency.

Funding information

We are grateful for the financial support received from Ministerio de Educación y Ciencia (Spain; ECO2013-48413-R, ECO2016-76578-R and ECO2017-88241-R).

Funders

  • Ministerio de Educación y Ciencia Spain
    • ECO2013-48413-R
    • ECO2016-76578-R
    • ECO2017-88241-R

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