Understanding the Relationship Between Municipal Structure and Size, Depopulation and Default Risk

Abstract Several international organizations and research scholars have concluded that two of the main problems in the management of public services are high public debt and increasing depopulation. It is hypothesized that increasing the financial viability of governments is likely a means of fighting depopulation in small municipalities. This paper identifies factors that influence the financial risks of small‐sized local governments by analyzing the impact of demographic, socioeconomic, financial and political variables on default risk. Our findings provide new insights into the contribution of the financial viability of public services to the fight against depopulation.