Naslov
Modelling local government unit credit risk in the Republic of Croatia

Autori
Posedel, Petra ; Primorac, Marko

Izvornik
Financial theory and practice (Zagreb) (1846-887X) 36 (2012), 4; 329-354

Vrsta, podvrsta i kategorija rada
Radovi u časopisima, članak, znanstveni

Ključne riječi
credit risk; local government units; Tobit model; Croatia

Sažetak
The objective of this paper is to determine possible indicators that affect local unit credit risk and investigate their effect on default (credit risk) of local government units in Croatia. No system for the estimation of local unit credit risk has been established in Croatia so far causing many practical problems in local unit borrowing. Because of the specifi c nature of the operations of local government units and legislation that does not allow local government units to go into bankruptcy, conventional methods for estimating credit risk are not applicable, and the set of standard potential determinants of credit risk has to be expanded with new indicators. Thus in the paper, in addition to the usual determinants of credit risk, the hypothesis of the infl uence of political factors on local unit credit risk in Croatia is also tested out, with the use of a Tobit model. Results of econometric analysis show that credit risk of local government units in Croatia is affected by the political structure of local government, the proportion of income tax and surtax in operating revenue, the ratio of net operating balance, net fi nancial liabilities and direct debt to operating revenue, as well as the ratio of debt repayment and cash, and direct debt and operating revenue.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA