Özet:

Grants are the primary revenue type for local governments in most countries. It is stated that income inequalities arising between the governments will be reduced with these revenues, and also, a crucial revenue will be obtained for the local administrators to maintain their services without any disruption. However, it is stated that besides the benefits they provide, they change the taxpayers' perceptions regarding fiscal instruments and the executives' approaches, which may negatively affect the fiscal decisions. These effects are examined through the concepts of fiscal illusion, flypaper effect and moral hazard. Starting from the theoretical framework regarding the concepts, the article aims to test whether the shares transferred from the general budget tax revenues by the central government in Turkey affect the borrowing decisions of the executives of the metropolitan municipalities. Accordingly, the System Generalized Moments Estimator (System GMM) was used, and the data set between 2014 and 2020 were analysed. In addition, other than the grants, the control and dummy variables that were wanted to be tested whether they had an impact on the borrowings of metropolitan municipalities were also included in the analysis. As a result of the analysis, it has been determined that as the general budget tax revenues increase, the borrowings of the metropolitan municipalities also increase. Moreover, it has been concluded that there is a significant relationship between the investment expenditures, operational balance, and population variables determined as the control variables and the ideology participating in the analysis as a dummy variable and borrowing.

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