DOIONLINE

DOIONLINE NO - IJMAS-IRAJ-DOIONLNE-6122

Publish In
International Journal of Management and Applied Science (IJMAS)-IJMAS
Journal Home
Volume Issue
Issue
Volume-2,Issue-10, Special Issue-1  ( Oct, 2016 )
Paper Title
Do Intergovernmental Financial Transfers Have an Effect Upon Municipal Borrowing? Subsequent Effect of Flypaper Theory in Municipalities in Turkey
Author Name
Hakan Yas, Emre Atilgan
Affilition
Finance, Banking and Insurance Department, Havsa Vocational School, Trakya University, Turkey Health Management Department, Faculty of Health Sciences, Trakya University, Turkey
Pages
23-27
Abstract
The postulate that intergovernmental financial transfers affect the increase in local government spending more than the own revenues do is taken as flypaper effect. If so, then a municipality, for instance, is expected to spend morenot because of the increase in its own revenue sources but because the increase in financial transfers received from higher level authority. However, municipalities have also borrowing option to finance their own expenditures. Thus the present threefold relation between transfers, own revenues and expenditures need to be enhanced by borrowing. In the past decade, the borrowing amount of municipalities in Turkey have distinguishably leaped up higher levels, whereas grants from central government also rises.This study examines whether a causality exists between the growth of intergovernmental financial transfers and of borrowing in municipalities in Turkey. The results in our estimation presents that there is a long runcausality in both financial sources. From a different view, the flypaper effect triggers the borrowing of municipalities in Turkey. Keywords— Intergovernmental Financial Transfers, Municipal Borrowing, Flypaper Effect.
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