This paper contributes to the scarce literature on government transparency by analysing the impact of political and socio-economic factors on municipal financial transparency. Our sample covers the 100 largest Spanish municipalities in 2008. Compulsory publicity and transparency are key to public management (rule-of-law theory). Our data show that Spanish municipalities are providing financial information beyond the legal requirements, thus exceeding the compulsory disclosures required by the rule-of-law theory. The more taxes and more transfers per capita, the more financial information is disclosed and, accordingly, the higher the transparency is. Therefore the municipalities are not taking advantage of fiscal illusion or principal–agent effects, since they are not concealing higher levels of taxes and transfers from citizens. Furthermore, left-wing parties are more transparent than right-wing ones. Finally, the population also has a positive effect on the achievement of financial transparency.

Public finance theories state that both political and socioeconomic factors must be considered in order to explain governments' finances. On the one hand, “partisan politics matters” thesis argues that progressive parties contribute to increase public deficit. On the other hand, Roubini and Sachs' weak government hypothesis ( 1989a Roubini , N. and J. D. Sachs . 1989a . “Political and Economic Determinants of Budget Deficits in the Industrial Democracies.” European Economic Review 33 : 903 – 938 . [Crossref], [Web of Science ®] [Google Scholar] , 1989b Roubini , N. and J. D. Sachs . 1989b . “Government Spending and Budget Deficits in the Industrial Countries.” Economic Policy: A European Forum 8 : 99 – 132 . [Crossref] [Google Scholar] ) states that the higher the government fragmentation, the higher spending, deficit and debt. Accordingly, our work evaluates whether municipal ideology and political strength have an impact on public expenditures and taxes. With this aim, we analyze a representative sample of Spanish municipalities (2,729) for the year 2005. We find an influence of the size of the political majority on the municipal financial situation. However, we do not find evidence of the impact of the government's political ideology. Economic and population variables are found highly significant. Our data also show a “flypaper” effect in the Spanish municipal sector.

En los últimos años se ha incrementado el interés por estudiar aspectos relacionados con la deuda pública. En este contexto, el presente trabajo pretende analizar las variables que mejor explican el endeudamiento en uno de los niveles en que se divide el sector público en España: el sector local. Para ello, empleamos una muestra formada por todos los ayuntamientos españoles que tienen más de 1.000 habitantes en el año 2008 (3.253), aplicando mínimos cuadrados en dos etapas. La principal conclusión a la que se ha llegado es que las variables que explican el endeudamiento municipal son heterogéneas. Por una parte, las variables de tipo socioeconómico (población, porcentaje de inmigrantes, nivel económico, transferencias e impuestos) afectan positivamente al nivel de deuda per cápita. Por otra parte, variables de tipo político, tales como la fortaleza política, nos indican que los gobiernos más débiles son los que tienen un menor nivel de deuda per cápita.

In the first years of the 21st century, there was a building boom in Spain, which triggered many corruption cases in municipalities. This paper contributes to the scarce literature on this issue by analysing the impact of socio-economic and financial factors on urban political corruption. Our sample covers the 110 Spanish largest municipalities for 2000–2009. The findings indicate that higher politicians’ salaries and more transparency are connected with lower corruption levels. In this way, we confirm theoretical assumptions that posit that municipalities where politicians have higher salaries present less corruption cases. Finally, municipal transparency should be enhanced, because it is related to lower corruption.