What Is Known and What Should Be Known About Factors Affecting Financial Sustainability in the Public Sector

Abstract

The international literature suggests that the causes of weak financial sustainability of public organizations depend on both external and internal conditions. Whereas the external conditions are related to demographic and socio-economic factors, the internal conditions are associated with the political and managerial settings, and thus, the latter could be addressed by the local government with the aim to maintain financial sustainability over the long term. Based on a literature review, the authors explain the most consolidated trend of such variables with respect to the impact of those variables on financial sustainability, and simultaneously, they reveal a disproportion in what the literature has most recently analyzed. Ultimately, the authors highlight the need for further research regarding the managerial factors and additional cross-country comparisons of the roles of both external and internal conditions.