A Study of the Degree of Fiscal Soundness Improvement in Local Governments: Evidence from Performance Feedback Theory

Key Points

• This research aims to determine whether using performance feedback improves the fiscal soundness of local governments.
• Established a panel dataset from 226 local governments.
• Conducted panel regression analysis using a two-way fixed effects model.
• Analyzed the effect of negative performance feedback relative to social aspirations on fiscal soundness.
• Negative performance feedback significantly enhances fiscal soundness improvement, particularly in the consolidated fiscal balance ratio.
• The factors influencing fiscal soundness improvement vary by type of local government.

Abstract