Getting the Smaller Picture: Small‐Area Analysis of Public Expenditure Incidence and Deprivation in Three English Cities

This paper examines public expenditure incidence at small‐area level in cities. The motivations for such research are briefly reviewed. The article reports on an attempt at measuring public expenditure across the majority of programmes down to the level of Census wards and the actual results obtained for three urban local authorities in England. The relationship between spending, income and deprivation is examined overall and for particular spending programmes, using a number of approaches including regression‐based expenditure models. The conclusions suggest that spending is indeed targetted on poorer areas but raise questions about both the strength of this relationship and how best to measure deprivation and the need to spend.     

Financial Performance Adjustment in English Local Governments

This paper analyses financial performance adjustment in English local governments and the specific accruals used to achieve it. Based on statistical approaches used in previous literature, our results indicate the use of abnormal accruals in English local governments in order to report surpluses/deficits close to zero as well as to avoid reporting big deficits. We find that depreciation and impairment expense of fixed assets is the item most significantly related to abnormal accruals. Consistent with the conservatism theory, local governments with higher leverage use more income‐decreasing accounting policies.     

Poverty,Preference or Pensioners? Measuring Material Deprivation in the UK*

Indicators of material deprivation are typically based on a two-part question, asking, first, whether respondents possess a series of deprivation items and, second – if they do not – whether this is because of a lack of resources or is by choice. This second subquestion, or ‘enforced lack’ criterion, is ubiquitous but its efficacy has been questioned by a number of authors. In an important critique published in Fiscal Studies, McKay (2004) claimed that older people were more likely than younger respondents to report that they did not want the items they lacked, despite their lower incomes, and also that the enforced lack criterion introduced a subjectivity which, in effect, required respondents to feel poor in order to be classified as such. This critique has potentially profound implications for poverty measurement. In this paper, we seek to address the question of whether, if we are to employ indicators of material deprivation for poverty measurement, we should include the enforced lack criterion or not. In seeking to answer this question, we draw on data from the British Household Panel Survey (BHPS) and present tests of reliability and validity on indices of material deprivation, with and without the enforced lack criterion. Using odds ratio and analysis of variance methods, we find that the inclusion of the enforced lack criterion provides a measure of material deprivation which is both more reliable, and more valid based on a subjective measure of deprivation as well as on a majority of more objective forms of deprivation. Amongst the remaining minority (ill health for both methods and income quintile for the analysis of variance method), the divergent results can be explained, at least in part, by the older age profile of respondents in poor health and on low incomes. Thus, while there are legitimate concerns about the performance of such deprivation indicators amongst certain subgroups – in particular, amongst older people – on aggregate the enforced lack criterion helps to distinguish between poverty and preference.     

Class,social deprivation and accounting education in Scottish schools: Implications for the reproduction of the accounting profession and practice

This paper investigates the links between class, deprivation and subject choice in the area of business studies, including Accounting and Economics, in Scottish secondary schools. Given the paucity of prior research, this study is necessarily exploratory but its findings will provide a basis for future research in Scotland and elsewhere. First, the literature on the link between deprivation and education is reviewed. Pierre Bourdieu's conceptualisiation of habitus, field and capital are introduced and provide the theoretical framework for the ensuing discussion. Second, the implications for accounting education at both school and university, and for the accountancy profession are examined. Third, the results of interviews, analysis of statistical data provided by the Scottish Government and the Scottish Qualifications Authority and two questionnaire surveys, one of Heads of Departments of Scottish secondary schools and the other of first year accounting students at Scottish universities, are reported in order to explore whether there are any indications of links between class, deprivation and subject choice in the area of business studies in Scottish schools. Finally, the implications of the research findings are discussed and conclusions offered.     

Explanators of Local Government Distress

This article develops a statistical model to explain sources of distress in local government. Whereas ‘financial distress’ in the private sector has been equated with a failure to meet financial commitments, here ‘distress’ is interpreted as an inability to maintain pre-existing levels of services to the community. Since the late 1990s local councils in an Australian state (New South Wales) have been required to estimate the cost of restoring infrastructure assets to a satisfactory condition (a requirement which predates that form of reporting on infrastructure condition introduced as an option in U.S. GASB 34). Information regarding the cost of restoring infrastructure is used in this study as a proxy for levels of distress (in contrast to the binary classification that characterizes much of prior private sector financial distress research). Data regarding service levels for a sample of 161 councils for 2001 and 2002 were used and a multiple regression model was estimated and interpreted. The main findings were that the degree of distress in local councils is positively associated with the size of the population they serve and the size and composition of their revenues. Road maintenance costs featured prominently in results, as higher road program costs were associated with higher levels of distress (particularly when interacted with other variables). However, the revenue generating capacity of councils had the strongest statistical impact on local government distress. Councils with lower percentages of rates revenue to total revenue and lower ordinary revenue levels to total assets were typically identified as more distressed. However, no systematic evidence was found that rural councils have higher distress levels than urban councils (i.e., both rural and urban councils serving larger populations were relatively more distressed than councils serving smaller populations). It is suggested that the model (or modifications thereof) may serve as an early warning system for those monitoring the circumstances and performance of local governments.     

Gini Indices and the Redistribution of Income

Just as the Gini inequality index captures people's relative deprivation (Yitzhaki, 1979), so, we show in this paper, Gini-based progressivity and horizontal inequity indices capture individual perceptions of relative fiscal harshness and ill-fortune. In fact, we find that these links between individualistic perceptions and the measurement of the distribution and redistribution of income generalise to the family of indices based on the extended Ginis of Donaldson and Weymark (1980) and Yitzhaki (1983). Through 'leaky bucket' experiments, we also suggest how we can parameterise the inequality aversion present in these indices. Analysis of the Canadian gross and net income distributions (conducted using recently developed statistical inference procedures) shows the distribution and the aggregation of these individual indicators of relative deprivation, fiscal harshness and ill-fortune in 1981 and in 1990.     

Why prisons have become a growth industry

Unable to break out of the straightjacket of local authorities’ administrative areas and the bureaucratic concept of ‘need to spend,’ the Department of the Environment has come up with an index of deprivation that is, to say the least, counter‐intuitive. If it were to use better indicators and to focus on smaller areas, it would stand a better chance of directing resources to where they are most needed.     

地方竞争是否阻碍了地方政府债务绩效的提升？——理论框架及空间计量研究

本文从举债行为策略视角考察地方竞争对地方政府债务绩效的影响。 首先,从不同地区间举债行为策略互动的视角对地方竞争如何影响地方政府债务绩效进行理论诠释,其次,在采用Global超效率DEA方法测度地方政府债务绩效的基础上,突破空间独立性假设,运用空间杜宾模型对地方竞争影响地方政府债务绩效的效果及空间外溢性进行实证检验。研究发现,在地方效用最大化目标导向下,无论是地方税收竞争还是公共投资竞争,都对债务增速产生了较为显著的正向影响和空间外溢效应,导致地方采取主动扩大债务规模的举债行为策略。与此同时,随着债务规模的持续增长,无论是地方税收竞争还是公共投资竞争,都将对债务绩效产生“规模报酬递减”的负向影响和空间外溢效应,尤其是公共投资竞争的影响效果更加明显。进一步地,如果考虑到可能存在预算软约束现象,地方竞争还将与预算软约束行为相结合,对债务绩效产生了“使用效率递减”的负向影响。本文结论为通过债务合理使用来促进经济高质量发展,防范化解地方政府债务风险提供了政策启示。     

On the Modeling and Forecasting of Socioeconomic Mortality Differentials: An Application to Deprivation and Mortality in England

In any country, mortality rates and indices such as life expectancy usually differ across subpopulations, for example, defined by gender, geographic area, or socioeconomic variables (e.g., occupation, level of education, or income). These differentials, and in particular those related to socioeconomic circumstances, pose important challenges for the design of public policies for tackling social inequalities, as well as for the design of pension systems and the management of longevity risk in pension funds and annuity portfolios. We discuss the suitability for the modeling and forecasting of socioeconomic differences in mortality of several multiple population extensions of the Lee-Carter model, including a newly introduced relative model based on the modeling of the mortality in socioeconomic subpopulations alongside the mortality of a reference population. Using England mortality data for socioeconomic subpopulations defined using a deprivation index, we show that this new relative model exhibits the best results in terms of goodness of fit and ex post forecasting performance. We then use this model to derive projections of deprivation specific mortality rates and life expectancies at pensioner ages and analyze the impact of socioeconomic differences in mortality on the valuation of annuities.     

Predictive Performance Evaluation Measures: Field Study of a Multi-Outlet Business

It is frequently suggested that accountants need to develop more comprehensive predictive measures of performance. In response, several predictive deterministic models have been proposed in the literature. This paper explores the feasibility of developing predictive statistical models of performance for revenue and profit centres. A large national retail organisation was selected to field test the applicability of such a model. The results indicate that a statistical model can detect significant differences in outlet performance in a multi-outlet firm, providing performance information useful for managerial evaluation. The methodology developed can be applied to performance evaluations in many retail firms.     

What we can expect from interstate banking

Though interstate banking has been legislatively prohibited, commercial banks have circumvented these restrictions. This has led to proposals to permit interstate banking. In this paper we examine the performance of one set of banks which has been allowed to operate on an interstate basis, namely, those grandfathered by the Bank Holding Company Act of 1956. The data and statistical tests confirm that the grandfathered BHCs have experienced a statistically significant reduction in the share of state deposits and homogenization in their profitability and portfolio composition compared with their peers in the same states over the 1960–1983 period. These results suggest that the ability to operate banks interstate has provided little in the way of long-run competitive advantages for those BHCs with this privilege. It is unlikely that interstate branching will result in the large money center banks dominating local and regional banking markets.     

PERFORMANCE REPORTING BY MALAYSIAN LOCAL AUTHORITIES: IDENTIFYING STAKEHOLDER NEEDS

The concept of public accountability promotes the need for a comprehensive set of performance‐related information to satisfy the information needs of a diverse stakeholder interest group. However, literature concerned with the scope of information to be disclosed, and in particular within the context of a developing country, is limited. This paper identifies the information set which stakeholders of Malaysian local authorities consider relevant in the monitoring and assessment of local authority performance. Stakeholders indicated strong interest in performance information that is not traditionally disclosed in the financial statements: non‐financial information particularly performance measurement of outputs, outcomes, efficiency and effectiveness. Disclosures in the Statement of Revenue and Expenditure and forward‐looking information are generally regarded as the most important disclosures. The results of the study also indicate differences amongst stakeholders as to the level of importance that they place on certain items especially items related to internal policies and governance and financial position of the local authorities. The findings will be of significance to policy makers interested in improving the performance reporting of Malaysian public sector entities, particularly local authorities.     

Strategic performance management: A balanced approach to performance management issues in local government

The drive for reform in the public sector worldwide has focussed attention on the measurement of performance in public sector organizations. This is particularly true in local government. Local government has traditionally been concerned with measuring the delivery of primary objectives, or results, at the expense of secondary objectives, or the determinants of organizational performance. Current strategic management literature suggests that there should be a strong linkage between strategic plans and performance measures.Kaplan and Norton’s (1992) balanced scorecard and Fitzgeraldet al. ’s (1991) results and determinants framework can provide this linkage. This paper reports on research into performance management systems in local government using the four dimensions of the balanced scorecard: financial, community, internal business processes and innovation and learning. It shows how the focus in this system of local government has been on the results of council work, ie. financial performance and to a lesser extent on how the community views performance. Local government performance measurement pays much less attention to the determinants, or means of achieving long-term, sustained organizational improvement in internal business processes, and innovation and learning. Whilst these issues are recognized as important, there are few measurement processes in place to manage performance in these areas. Strategic performance management demands an approach that recognizes the importance of a focus on both results and the means of achieving these results. This paper highlights a suggested framework for strategic and balanced local government performance measurement.     

论地方政府负债与公共经济绩效评价

近些年来,我国地方政府负债数额大大增加,大到有风险了,对这一现象如何认识,不仅牵涉到财政体制的问题,还对政府的公共经济管理绩效有较大影响。本文根据中央和地方财政支出比重的22年数据说明增加的程度,然后从几个方面剖析地方政府负债猛增的原因,评价地方政府负债这一公共支出对公共经济绩效正反两面的影响,提出对地方政府负债要合理利用和管理,促进公共经济绩效提升。     

Profile of earners and remittances in Mexico: a relative deprivation approach

This research analyzes the individual qualities and microeconomic profiles from mexican workers in Mexico, which under relative deprivation conditions, take the choice to leave the country as an alternative way to improve their life expectations. It is found that mexican assistance programs encompass heterogeneous results and thus, are not a generalized signal of improvement for the families. Using a Multinomial Logit specification we found that public assistance programs reinforce relative deprivation of non-migrants families on those who have relatives who migrated. Human capital attributes present a direct relation with the process of migration not only for traditional exporting labor regions, but also for the north-border of the country. The south supports the relative deprivation hypothesis meanwhile, is not the case for the USA-mexican border States.     

Can machine learning models save capital for banks? Evidence from a Spanish credit portfolio

We study the impact of machine learning (ML) models for credit default prediction in the calculation of regulatory capital by financial institutions. We do so by using a unique and anonymized database from a major Spanish bank. We first compare the statistical performance of five models based on supervised learning like Logistic Lasso, Trees (CART), Random Forest, XGBoost and Deep Learning, with a well-known model like Logit. We measure the statistical performance through different metrics, and for different sample sizes and features available. We find that ML models outperform, even when relatively low amount of data is used. We then translate this statistical performance into economic impact by estimating the savings in capital when using an advanced ML model instead of a simpler one to compute the risk-weighted assets following the Internal Ratings Based (IRB) approach. Our benchmark results show that implementing XGBoost instead of Logistic Lasso could yield savings from 12.4% to 17% in terms of regulatory capital requirements.     

The Potential Impact of Reforms to the Essential Parameters of the Council Tax*

Council tax was introduced in Britain in 1993 and represents a unique international property tax. There is a growing belief that it is time to reform the number and structure of council tax bands, but such views have a minimal empirical base. This paper sets out to assess the impact of changing the bands on personal and local government finances, and extends the analysis to the role of the tax multipliers linked to each band. The research is based on the experience of a representative sample of local authorities in Scotland. A statistical revaluation for 2000 is estimated for the existing eight‐band system, and from this base a 10‐band system is calculated. Financial implications are then simulated for each local authority, taking account of central resource equalisation mechanisms. The results indicate that increases in the number of bands will have little impact on the burden of the council tax compared with regular revaluations. Changing the tax multiplier range has the greatest impact on local authority finances and council tax payments.     

Performance and informed trading. Comparing foreigners,institutions and individuals in an emerging stock market

Do local institutions, local individuals or foreigners perform better in a small emerging market? We seek answers to this question by examining the investment performance of each group of investors using two unique databases of Colombian stocks. Our analysis serves as an out-of-sample test of previous findings. We find that local institutions have better outcomes than foreigners and local individuals on all performance measures. Furthermore, local individuals perform better than foreigners on trading execution, while foreigners generate better long-term returns. Using a bid-ask spread decomposition, we provide additional evidence that the better performance of institutions is consistent with informational advantages. Our findings reconcile contradictory statements from previous studies.     

Improving Local Government Performance: One Step Forward not Two Steps Back

This article discusses the various inititatives that have been introduced to measure and improve local government performance in the UK over the past decade. It explains why the Local Government Improvement Programme (LGIP) is the most aligned to the modernization and performance improvement agendas. The author uses a new outcome-based measurement model to assess how the six local authorities which piloted the LGIP responded to the 'areas of concern' identified by review teams. The analysis suggests that there are a number of organizational determinants that underpin successful performance improvement and which could have wider currency for both the UK and European local government sectors.     

All in the Mind: Citizen Satisfaction and Financial Performance in the Victorian Local Government System

While a significant body of literature exists on local government efficiency, much less is known about its effectiveness, especially financial performance and resident satisfaction. To address this gap in the empirical literature, the present paper uses system‐wide official annual data on resident satisfaction in the Victorian state local government system in Australia to investigate the relationship between annual net operating results and overall citizen satisfaction. In addition, in order to garner a deeper understanding of this relationship, we evaluated the assumption in the ‘near‐to‐zero balance’ public accounting literature that local residents prefer an insignificant annual balance in operating performance compared to substantial annual losses or surpluses. We found that there is a significant negative association between overall satisfaction and its components and financial performance for Victorian local government as a whole. However, this association is largely restricted to rural councils with surpluses. By contrast, we find no relationship between satisfaction and near‐to‐zero balances. We conclude by considering the implications of our findings for both the public accounting literature and local government policymaking.