Evaluation of the Financial Performance of the Municipalities in Slovakia in the Context of Multidimensional Statistics

Jozef Lukáč,Daniela Hrehová,Katarína Teplická,Katarína Čulková

doi:10.3390/jrfm14120570

Abstract

In some studies, only financial aspects are emphasized, but we also see cases of assessing the financial health of municipalities through socio-economic indicators. Public organizations worldwide have had to increase their financial performance by adopting management practices. Nonetheless, financial performance might be mostly predicted by contingencies that are not within direct managerial control. The purpose of this paper is to identify clusters of municipalities on the basis of agglomerate cluster analysis, the results of which will point to the financial situation of the municipalities in the selected region. The main aim of this contribution is to identify the location of the municipalities of the chosen self-governing region of Slovakia using the clustering method by selected financial indicators. Individual clusters have similar properties and they differ from the characteristics of businesses in other clusters. The results show that organizational and environmental contingencies affect financial performance, but a significant amount of variation in financial performance is unexplained—indicating that management creates better financial health in the municipality and creates a clearer budget for the management, employees, and residents of the municipality.

Highlights

There is pressure on municipalities to make more efficient use of their property to receive the greatest possible benefit in terms of economic, social, and territorial development (Papcunová 2013)
The purpose of this paper is to identify clusters of municipalities on the basis of agglomerative cluster analysis, the results of which will point to the financial situation of the municipalities in the selected region
We performed a statistical analysis with the research question of whether there are financial indicators that significantly affect the financial situation of municipalities in eastern Slovakia

Summary

Introduction

There is pressure on municipalities to make more efficient use of their property to receive the greatest possible benefit in terms of economic, social, and territorial development (Papcunová 2013). The purpose of this paper is to identify clusters of municipalities on the basis of agglomerative cluster analysis, the results of which will point to the financial situation of the municipalities in the selected region. We performed a statistical analysis with the research question of whether there are financial indicators (variables) that significantly affect the financial situation of municipalities in eastern Slovakia. Due to the lack of studies orientated to the evaluation of the financial performance of municipalities, especially in post-communist countries such as Slovakia, the results of this contribution may provide novel insights into municipalities’ management

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Conclusion