Do municipal mergers work? Evidence from municipalities in Greece

Michail Pazarskis,Spyridon Goumas,Andreas Koutoupis,Konstantinos Konstantinidis

doi:10.22495/jgr_v8_i2_p6

Abstract

Greek municipalities involved in mandatory mergers from the Kallikratis program after the end of 2010. The purpose of this study is the accounting evaluation of Greek municipalities after the implementation of the Kallikratis program in the period of the economic crisis in Greece (2011 and onwards). To examine the success of the Kallikratis program in a difficult era for Greece we examine public accounting data for several accounting measures for the Greek municipalities; also we try to reveal if any municipalities’ geographical area gained better performance under these circumstances. The results of this study showed that with the Kallikratis program, several municipalities, apart of new increased responsibilities in the post-Kallikratis period and with reduced state financial support, managed to achieve better results with increased their cash and cash equivalents, their securities and decreased their short-term debt. Last, according to the geographical area, these mandatory municipal mergers were more beneficial for some municipalities than to others, with better financial performance, limiting its obligations and improving its net position, thus providing us new insights to local development for Greece.

Highlights

In the jurisdictions of modern states, it is envisaged, besides the legal person of the state, the institutionalization of a large number of other public legal entities, in which entities exercising public authority is organized
In order to analyze the impact of the Kallikratis program over all the Greek municipalities on mandatory municipal mergers the study compares the mean from the sum of each accounting measure for H1 using two independent samples‟ mean t-tests for unequal variances (Pazarskis et al, 2016)
Even if the state ensures the necessary resources in order for municipalities to accomplish their mission, the Greek state control is restricted to controlling the legitimacy of their actions

Summary

Introduction

In the jurisdictions of modern states, it is envisaged, besides the legal person of the state, the institutionalization of a large number of other public legal entities, in which entities exercising public authority is organized. This method of administrative organization, i.e. the establishment of organizational units of the public administration, which are in particular legal persons, different from the state personality and have their own bodies, is called in Greece self-government or more correctly in the international arena, Local Government Organization (LGO). The first degree of LGOs (currently constituted by the Municipalities) enjoys absolute constitutional protection because their origin is directly provided by the Greek Constitution (Pantelidis et al, 2018)

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