Explanatory factors of borrowing at the local level in Turkey: A panel data analysis on metropolitan municipalities

Borrowing at the local level in Turkey has increased significantly over the past forty years. It can be stated that this increase has been experienced especially in metropolitan municipalities, which have about three-quarters of the population and are considered as the primary type of local government in terms of the resources they obtain and the expenditures they make. Accordingly, it is essential to examine the borrowings of metropolitan municipalities from different aspects. It can be stated that the regulations made and policies implemented by the central government are as determinative as the decisions taken by the executives in the borrowings of the municipalities. Within the scope of the research, it aims to determine the factors that impact the borrowings of metropolitan municipalities in Turkey. Therefore, the fiscal, political, institutional, demographic, socio-economic, economic and geographical factors that the metropolitan municipalities and the central government are determining have been included in the analysis. Within the scope of the analysis, System Generalized Method of Moments Estimator, one of the dynamic panel data models, was used. The method allows the variables of which executives are determinant to be included in the analysis separately and the effects they create on borrowing to be tested together constitute the original aspects of the research. As a result of the analysis, capital expenditures, operational balance, interest expenditures, ideology and political budget theory, which are the determinants of the metropolitan municipalities, and the shares taken from the general budget tax revenues, population, gross domestic product, and being a touristic city, which are the determinants of the central government, were determined to effect on the debt stock used as the explained variable.