The impact of public financing on the financial performance of local governments in Morocco

Abstract

This study examines the impact of public financing on the financial performance of local governments in Morocco, focusing on per capita investment expenditure. Using panel data from 45 local governments in the Tiznit and Tata provinces, collected between 2018 and 2022, the analysis reveals that VAT allocation, total expenditure, and operating revenue are positively and significantly associated with local investments. Additionally, territorial characteristics, such as geographic area and urban location, also play a crucial role in determining investment levels. However, political alignment does not have a significant effect on investment spending. These findings support existing literature, suggesting that higher levels of public revenue and expenditure, along with favorable geographic characteristics, promote investment in local governments.