Effects of the subprime crisis in the collection, liquidity and indebtedness of municipalities in southern Brazil

Abstract

The goal of this study is to verify that the crisis of 2007 did not result in statistically significant change in the collection, liquidity and debt of the municipalities located in southern Brazil. The theoretical framework includes aspects related to systemic financial crises, finance theory, public choice theory, based on LRF indebtedness and performance indicators. The concern in investigating the topic is justified by the impact of the systemic crisis in the economy of solvent and insolvent companies and the management of the res publica of the developed and underdeveloped countries. It is descriptive for its aims, documental for its procedures and quantitative for the way the problem is approached. Among the results, it is stressed that the crisis occurred in 2007, resulted in no statistically significant change in debt and liquidity of the municipalities and produced effects on the structure indicators and the collection of revenues, thus rejecting the hypothesis the general void. This rejection is justified by the coefficient significance of the variables included. Such a case may have occurred due to the fact that municipalities may have adjusted their investment expenses or reduced so that the cash flow has remained constant.

Key words: systemic financial crises, finance theory, public choice theory.