Fatores explicativos da condição financeira nos municípios de Minas Gerais

Abstract

The debate about the economic viability of small Brazilian municipalities gained greater prominence with the possible extinction of those entities considered incapable of providing their financial sustainability. Although, in most cases, the revenue power of small municipalities is low, the relevance of the role they play in the process of decentralization of public policies is undeniable. In this context, this study aims to identify the factors that explain the financial condition of small municipalities in Minas Gerais. Accounting information from the last four years (2017-2020) was collected from 229 municipalities that had a population of less than 5 thousand inhabitants in 2020. From the perspective of the Financial Condition Theory, the research was carried out in two stages: the first was to find the financial condition of the municipalities using Brown's model (1993), and the second was to identify the financial variables that are capable of influencing the financial condition of these municipalities. Using an econometric model with panel data, it was found that the variables Personnel Spending and Debt Level were significant at a significance level of 1%. The results revealed the existence of factors related to budgetary solvency and long-term solvency that impact the financial condition of small municipalities. The research contributes to greater knowledge about the explanatory factors of financial condition, mainly when analyzing small municipalities, using a model consolidated in international literature.