Local government and political turbulences: evidence from municipality commissionership in Italy

Abstract

Purpose In the debate on the determinants of the local government financial performance, much of the literature has focused on political factors, such as mayor profile, political ideology, political fragmentation and incumbent elections. Rather than examining how politicians behave under political interests, This paper aims to observe financial performance in the absence of electoral incentives, focusing on municipality commissionership established by Italian law. Design/methodology/approach Using a sample of Italian municipalities commissioned between 2017 and 2020, the study compares trend across and after the commissionership adopting the paired Wilcoxon signed-rank test on selected financial measures encompassing 2016–2022. The assessment of the financial performance involved four main dimensions: i) autonomy, ii) liquidity, iii) operating performance and iv) collection efficiency. Findings The findings confirm an overall improvement, which confirms that even in a limited timeframe, a commissioner can implement decisions that lead to more efficient financial performance. However, the most significant improvements were observed particularly after the commissionership, suggesting that the influence of the commissioner extends beyond their tenure. The financial dimensions most impacted were autonomy, liquidity and collection efficiency. Originality/value While many studies explored the incidence of turbulences such as Covid-19, this study focuses on the effects of political turbulences, exploring what occurs when an independent commissioner replaces political representative, and whether this change mitigates politician-driven inefficiencies. Indirectly, the study contributes to the broader understanding of the incidence of political factors affecting local government financial performance and offers insights into their scale and implications.