The aim of this paper is to propose a new methodological approach that contribute on the national theme about the prevention of financial distress in local authorities. It is known that a part of national and international literature (Ziruolo 2000; Kloha et al. 2005; Zafra-Gomez 2009; Trussel et al. 2009; García-Sanchez et al. 2012; Farneti et al.. 2011; Rubino et al.. 2016; Sorci 2016; Eboli, Toto, Ziruolo, 2020; Bluwstein et. al, 2020; Anulov Fantulin et. al 2021) agrees to highlight the key role of structural deficitiveness parameters in preventing financial default of local authorities. On that theme, the Observatory on Finance and Accounting of Local Authorities in the report dated 15 February 2017 called “First Program Lines”, highlighted the application limits of most of the indicators of financial soundness of local authorities identified by Ministerial Decree 18.02.2013. The present research project, starting from the results highlighted by the Observatory in its study, propose a new methodology oriented to a predictive view of financial distress distress in local authorities through a “pre-deficit” state of mind inspired by models largely diffused both in private and public sector (Altmann, 1968; Rossi et.a al, 2012). Through a quantitative approach using a LSD regression model, this paper test a new set of indicators on a dataset of municipalities through a 5 year time laps (2013- 2009) highlighting the possibility to predict financial distress in the public sector as inspired by previous authors such as Zafra- Gomez (2009) and Sargiacomo (2000). The data set is composed by 96 balance sheets refered to 96 Italian local authorities divided in two sub clusters: in financial distress and not in financial distress. The distinction between the two clusters is given by the Italian Central Government in according with Corte dei Conti. Even if the data set considered is referred to an historical period before the introduction in Italy of the accounting harmonized system (D.lgs 118/2011), we consider several pre-conditions in application of our methodology inspired by the reports of Italian Auditors committee and authority (Corte dei Conti) that contributes to the strengthens of the results. The results achieved through the innovative methodological approached used, contribute to change the approach to the “financial distress patology” in the local authority context from an ex-post evaluation to an ex-ante analysis. Infact, results shown that in the data set proposed, the predictivity model proposed allow to anticipate by one year the financial distress of local authorities improving the methodology currently in use by Italian Municipalities.
KEYWORDS: public sector, prevent financial default, municipalities
Ziruolo, A., Berardi, M. (2021). La prevenzione del default finanziario negli enti locali. Un differente approccio metodologico, RIREA n.2, pp. 186-203. DOI: 10.17408/RIREAAZMB010203042021