Determinants of Financial E-Transparency in Honduran Municipalities

Determinants of Financial E-Transparency in Honduran Municipalities

Francisco Bastida (University of Murcia, Spain & American University of Armenia, Armenia), Lorenzo Estrada (Francisco Morazán National Pedagogical University, Honduras) and María-Dolores Guillamón (University of Murcia, Spain)
DOI: 10.4018/IJPADA.2020040102
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Abstract

This paper contributes to the scarce literature on e-government transparency in Central America by analyzing the impact of political, financial and socio-economic factors on municipal financial e-transparency in Honduras. The sample covers 86 Honduran municipalities in 2016-17. The data show a weak impact of ideology and mayor's gender on e-transparency, with progressive governments and men achieving more e-transparency. Municipalities receiving more transfers are more transparent. Taking all financial variables together, the data are in line with the Theory of Fiscal Illusion and the Theory of Agency, since municipalities are not reporting greater levels of taxes, deficit, and debt to their taxpayers. Honduran municipalities are only concerned about meeting central government legal requirements about transfers received. The fact that municipalities do not increase e-transparency to be held accountable by their citizens is against the assumptions of the Theory of Legitimacy. Finally, larger municipalities and with greater income are more fiscally transparent.
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1. Introduction

Transparency and access to public information are considered essential for the proper functioning of governments (Sáez-Martín, López-Hernandez and Caba-Perez 2017). Public sector transparency is required by State legislation as a way to guarantee the understanding of the application of public policies, to reduce uncertainty, to promote citizen participation and democracy (Lee 2017).

On the one hand, a transparent fiscal system encourages politicians to adopt better policies that consolidate a sustainable fiscal system (Arbatli and Escolano 2015). On the other, it improves public debate. Khadjavi, Lange and Nicklisch (2017) point out that transparency promotes the integrity of public officials, thus reducing the risk of corruption. Similarly, Cucciniello, Porumbescu and Grimmelikhuijsen (2017) show that greater transparency results in lower corruption. These authors also find a positive relationship between transparency and financial management.

In Latin America, with high levels of corruption, low level of economic and human development, recent legislation is seeking greater disclosure and transparency websites. According to García-Tabuyo, Sáez-Martín and Caba-Pérez (2016), this fact is more evident in Central America countries, that rank as the most corrupt countries in Latin America, but have passed laws of free access to information, as a way to promote a culture of transparency. Despite these transparency legislations, the legacy of authoritarianism and opacity is still reflected in most of Central America countries (Michener 2015).

Considering the impact of municipal policies on citizens’ lives, municipal decisions ought to be transparent. The greater the municipal transparency, the greater the citizens’ confidence in their authorities (Mohelská and Sokolová 2017). Aslim and Neyapti (2017) argue that, to increase efficiency and well-being, there must be a complementarity between fiscal decentralization and mechanisms that guarantee accountability and transparency at the local level.

Cucciniello, Porumbescu and Grimmelikhuijsen (2017) show a research gap in transparency in Latin America. Nearly half of all research on this topic focuses on Europe and North America, and that only 5 per cent of the articles correspond to Latin America (8 articles of 164). Similarly, de Widt (2016) points out that, in spite of the quantity of public funds involved, local governments receive limited academic attention. The reason is twofold. First, the measurement of transparency is a complex issue, which even becomes more problematic at the sub-national level. Second, getting reliable data is a difficult task. Therefore, to fill this gap, we build our variable on e-transparency based on the Honduran official website of municipal financial transparency (https://portalunico.iaip.gob.hn/). Based on this e-transparency variable, this article studies the political, financial and socioeconomic determinants of municipal financial e-transparency on 86 municipalities, for 2016 and 2017.

The paper is organized as follows. Section 2 discusses the literature. Section 3 describes the Honduran municipal sector. Section 4 addresses the research design and methodology. Section 5 presents the regressions and discusses the empirical results. Finally, section 6 summarizes conclusions and proposes further research.

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