Municipal financial vulnerability in pandemic crises: a framework for analysis

ABSTRACT

Purpose>This paper explores how global pandemic crises affect the financial vulnerability of municipalities.Design/methodology/approach>This paper is developed from the relevant literature an analytical framework to examine municipal financial vulnerability before a global pandemic crisis and in its immediate aftermath by mapping and systematizing its dimensions and sources. To illustrate how it can be used and evaluate its robustness and flexibility, such a tool was applied to Portugal and Italy, two countries that particularly suffered from the Covid-19 crisis.Findings>The application of the analytical framework has shown how financially vulnerable municipalities are to global pandemic crises. Financial vulnerability relates to issues ranging from institutional design to internal financial conditions and the perception of the capacity to cope with a crisis. Results further reveal that vulnerability has an inherent contingent nature in time and space and can lead to paradoxical outcomes.Research limitations/implications>This paper provides a tool that can be useful for both academic and public policy purposes, to further appreciate municipal financial vulnerability, especially during crises.Practical implications>Municipalities can use the framework to better manage their financial vulnerability, strengthening their anticipatory and copying capacities, while oversight authorities can use it to help municipalities become less financially vulnerable or, at least, more aware of their financial vulnerability.Originality/value>Municipal financial vulnerability to global shocks has not been explored extensively. Also, the Covid-19 pandemic is different from previous global crises as it affected society overnight with the implementation of lockdown and social distancing measures.